Global Connector Research Grp., Inc. v. Fischer

Full title: GLOBAL CONNECTOR RESEARCH GROUP, INC., Plaintiff and Respondent, v. FRANK…

Court: COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE

Date published: Jun 27, 2011

No. G042673 (Cal. Ct. App. Jun. 27, 2011)

Opinion

G042673 G042675 G042934

06-27-2011

GLOBAL CONNECTOR RESEARCH GROUP, INC., Plaintiff and Respondent, v. FRANK FISCHER, Defendant and Appellant. GLOBAL CONNECTOR RESEARCH GROUP, INC., Plaintiff, Cross-defendant and Respondent, v. APEX EQUITY PARTNERS, INC., Defendant, Cross-complainant and Appellant. GLOBAL CONNECTOR RESEARCH GROUP, INC., Plaintiff, Cross-defendant and Respondent, v. APEX EQUITY PARTNERS, INC., Defendant, Cross-complainant and Appellant; FRANK FISCHER, Defendant and Appellant; BELGRAVIA CAPITAL CORPORATION, Objector and Appellant.

Frank Fischer, in pro. per., for Defendant and Appellant. Law Offices of Brady A. Price and Brady A. Price for Defendant, Cross-complainant and Appellant and for Objector and Appellant. Kull + Hall, Robert F. Kull and Kevin P. Hall for Plaintiff and Respondent and for Plaintiff, Cross-defendant and Respondent.

FYBEL

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 06CC08868)

OPINION

Appeals from a judgment of the Superior Court of Orange County, Gregory Munoz, Judge. Affirmed in part and reversed in part.

Frank Fischer, in pro. per., for Defendant and Appellant.

Law Offices of Brady A. Price and Brady A. Price for Defendant, Cross-complainant and Appellant and for Objector and Appellant.

Kull + Hall, Robert F. Kull and Kevin P. Hall for Plaintiff and Respondent and for Plaintiff, Cross-defendant and Respondent.

INTRODUCTION

Apex Equity Partners, Inc. (Apex), Belgravia Capital Corporation (Belgravia), and Frank Fischer appeal from a judgment entered following a trial in which the jury awarded Global Connector Research Group, Inc. (Global), damages for breach of contract, intentional misrepresentation and concealment, and interference with prospective economic advantage. The jury awarded Global $430,350 for breach of written contract, and found Apex liable for breach of oral contract, breach of third party beneficiary contract, and quantum meruit, but found zero damages on those causes of action. The jury awarded Global $150,000 for intentional misrepresentation and $50,000 for interference with prospective economic advantage against Fischer. The jury found Apex and Fischer liable for concealment but found zero damages for it. The jury also imposed $125,000 in punitive damages against Apex and Fischer.

During trial, the court granted a nonsuit on Apexs cross-complaint against Global. After entry of judgment, the court awarded Global over $675,000 in attorney fees based on a contractual attorney fees provision and granted Globals motion to add Belgravia and Fischer as judgment debtors on the ground they are alter egos of Apex.

We reverse the award of attorney fees, the award of damages for interference with prospective economic advantage, and the order granting the motion to add Belgravia and Fischer as judgment debtors. In all other respects, we affirm.

FACTS

I.

The Agreement

Global, doing business as Fleck Research,¹ and Apex entered into a contract called the success fee agreement (the Agreement) in January 2003. In essence, the Agreement provided that Global would search for, and introduce Apex to, acquisition candidates in exchange for payment of a success fee. Under "Services To Be Provided By [Global]," the Agreement states: "Based upon information provided by [Apex], [Global] shall endeavor to search, locate, and bring to [Apex]s attention appropriate business entities worldwide, hereinafter individually referred to as Entity, with which [Apex] may have potential business opportunities (foreign and domestic) including, but not limited to acquisitions (of or by the Entity), strategic alliances, and joint ventures, as well as product and market opportunities. A profile of each Entity and/or product line will be provided. Upon [Apex]s approval to proceed, [Global] will contact the appropriate individual(s) within the Entity and make all necessary introductions to enable [Apex] to conduct its negotiations."

1 Many documents in the record (including the success fee agreement and the judgment) use the name Fleck Research instead of Global. For uniformity and clarity, this opinion uses the name Global.

Globals compensation was to be determined by a percentage of the acquisition price according to a schedule set forth in the Agreement. Paragraph 3.a. of the Agreement states, in part: "Upon the first consideration being exchanged or provided (Closing) of an Acquisition, [Apex] agrees to pay or cause to be paid to [Global] the greater of $50,000.00 or a sum calculated on the total of the following formula (the Formula), based on the total consideration exchanged or agreed or committed to be exchanged in such transaction (the Price), taking into account, without limitation, as may be applicable, the cash paid, debt assumed or discharged, [etc.] . . . ."

The Agreement had a 12-month term commencing in January 2003. The Agreement provided that "[t]ermination shall not affect [Apex]s obligation to pay [Global] its fees otherwise payable hereunder with respect to the closing of any transaction introduced or brought to [Apex]s attention by [Global] pursuant to this Agreement within eighteen (18) months of the termination date." Global thus would be entitled to payment of the success fee so long as any transaction brought to Apexs attention by Global closed within 18 months of the Agreements termination date.

Under "Miscellaneous," the Agreement provided, "[a]ny amendment to this Agreement shall be in writing."

Before Apex and Global entered into the Agreement, Fischer represented to Global that Apex had access to or was backed by billions of dollars from various lenders. Apex represented on its Web site that it or its principals had put together "a number" of acquisitions.

II.

Global Introduces Apex to Winchester Electronics and Cinch Connectors.

After entering into the Agreement, Global introduced Apex to about 50 acquisition candidates, including Winchester Electronics (Winchester) and Cinch Connectors (Cinch). Fischer expressed Apexs interest in acquiring Winchester in a letter dated January 23, 2003 to Winchesters owner, Northrop Grumman Corporation (Northrop). Fischer wrote that Apex would provide the capital for the transaction and that "Apex obtains its equity funding from high net worth and institutional investors."

In a letter to Northrop dated February 19, 2004, Fischer submitted, on Apexs behalf, a "non-binding indication" of interest in acquiring Winchester for $15 million to $20 million. Fischer wrote he anticipated the purchase price would be paid in cash provided by Apex or an affiliate and "[t]he transaction would not be conditional upon financing." Based on that letter, and the January 23, 2003 letter, Globals president, Monalisa Berbey, believed Apex had the ability to self-fund the acquisition of Winchester. In 2005, Apex had a negative net worth of $615,566 and did not have the funds to acquire Winchester on its own. Fischer did not advise Global that Apex had no money to contribute toward the acquisition of Winchester.

After the term of the Agreement ended, Apex entered into an exclusivity agreement for the purchase of Winchester for an aggregate price of $20 million. By April 2004, an asset and stock purchase agreement had been drafted, and the exclusivity agreement was periodically renewed. In August 2004, Apex entered into a letter of intent and exclusivity agreement to purchase Cinch for $100 million. A purchase agreement for Cinch was subsequently drafted.

III.

Global Continues to Provide Services for Apex After the Agreement Terminates.

For about three and a half years after the Agreements term commenced, Global provided services and performed work for Apex at its request. Berbey and others at Global participated in weekly and often daily telephone calls with Fischer, and Global generated 40 to 50 research reports for Apexs use. The reports contained over 5,000 pages, required the expenditure of about 7,400 hours of work to produce, and resulted in another 2,400 hours of time spent corresponding with Fischer and others at Apex. Global usually would have charged a total of $985,000 for that work, but did not bill Apex because it intended to recoup the costs from payment of the fee under the Agreement.

Nobody from Apex informed Global when the term of the Agreement ended in January 2004, and nobody at Global had calendared the termination date. Berbey testified a termination date for the Agreement "didnt cross my mind" because Fischer continued to call her many times a day. Nobody from Apex ever asked Berbey why Global continued to provide it services; she testified, "[i]t was always the belief were closing the transaction or were going to be celebrating."

At some point, Fischer contacted Berbey and said he was looking for "better financial terms" for the acquisition of Winchester and Cinch. She provided him contact information for five or six companies, including Audax Management Company, LLC (Audax). In late 2005 or early 2006, Fischer told Berbey he was having discussions with Audax.

IV.

Apex Enters into an Exclusivity and Noncompetition Agreement with Audax.

By early 2006, Audax had concluded Apex did not have the financial ability to acquire Winchester and Cinch. On February 26, 2006, Apex and Audax entered into an "Exclusivity and Non-Circumvention Agreement" (the Apex/Audax Agreement), pursuant to which Apex agreed for a period of time not to directly or indirectly pursue acquisition of Winchester or Cinch to permit Audax to acquire those companies. Audax agreed to pay Apex a "deal/closing fee" of $1 million if Audax acquired Winchester and a "deal/closing fee" of $2.5 million if Audax acquired Cinch. Apex agreed to transfer its letter of intent for the acquisition of Winchester to Audax, giving Audax the right to acquire Winchester on the same terms that Apex had.

Apex also agreed to be responsible for all out-of-pocket expenses, including any fees due to Global. A representative of Audax testified: "The ultimate agreement that we received was that we were going to pay Apex the amount of money which . . . satisfied the [oblig]ation they had to [Global] . . . . That was it. That was the basis of our understanding."

The Apex/Audax Agreement included a nondisclosure provision prohibiting the disclosure of its terms or of the negotiations leading to it, except to certain persons and entities including "advisors and representatives of their advisors."

Neither Fischer nor Audax informed Global of the Apex/Audax Agreement or of the ensuing negotiations between Audax and Northrop for the acquisition of Winchester. Apex nonetheless continued to seek Globals assistance in providing data and analysis regarding Winchester and Cinch. This continued assistance included conference calls with Apex and Audax. At Apexs request, Global generated and delivered to Apex at least 24 reports, and Apex requested that Global prepare a product-line analysis on the synergies of combining Winchester and Cinch.

V.

Audax Purchases Winchester and Pays Apex $1 Million.

Audax purchased Winchester in June 2006. Although, up to that time, Fischer had sent many e-mail messages and had made many telephone calls to Global requesting information on the acquisition of Winchester, he never mentioned the transfer of the acquisition right to Audax or any termination of the Agreement. As late as May 16, 2006, Fischer had advised Global the renegotiated purchase price for Winchester was $18.5 million and had directed Global to prepare an invoice based on that price. In response, Global prepared an invoice for $285,000 subject to adjustment if the total consideration paid for Winchester exceeded $18.5 million. Apex did not object to the invoice.

On June 14, 2006, Berbey asked Fischer about the status of Apexs purchase of Winchester. He replied the transaction was "still on track" and the acquisition was expected to close within a few weeks. Just 12 days later, on June 26, Audax announced it had completed the acquisition of Winchester. In an e-mail to Fischer on that date, Berbey stated: "Congratulations! Finally, one done!"

Audax paid Apex the $1 million deal/closing fee owed under the Apex/Audax Agreement.

Apex did not pay Global the success fee under the Agreement. Apex claimed it did not owe the fee to Global because Audaxs acquisition of Winchester closed more than 18 months after the date of the Agreement and because Apex was not the acquiring entity. Instead, based on the formula set forth in the Agreement, Apex offered to pay Global $50,000—which was 5 percent of the $1 million deal/closing fee Apex received from Audax. Apex paid vendors out the $1 million it received from Audax and never produced bank records or a ledger to account for the remainder.

Neither Apex nor Audax acquired Cinch. Apex sued Cinch, its management, and its owner, Safran SA (Safran), for interfering with Apexs attempts to obtain financing to buy Cinch.

PROCEDURAL HISTORY

Global filed a complaint against Apex and Fischer in August 2006. The operative complaint is the fifth amended complaint, which asserted causes of action for (1) breach of written contract, (2) declaratory relief, (3) breach of oral agreement, (4) promissory estoppel, (5) quantum meruit, (6) intentional misrepresentation and concealment, (7) breach of third party beneficiary contract, (8) interference with prospective economic advantage (intentional and negligent), (9) unfair competition/trade practices under Business and Professions Code section 17200, and (10) violation of Californias Uniform Trade Secrets Act (Civ. Code, § 3426 et seq.). Causes of action (1) through (5) and (7) were against Apex only; causes of action (6), (9), and (10) were against both Apex and Fischer; and cause of action (8) was against Fischer only.

In April 2009, about 25 days before trial, Apex filed a cross-complaint against Global asserting causes of action for interference with prospective economic advantage, intentional misrepresentation, and negligent misrepresentation.

A jury trial commenced in May 2009 on the complaint and cross-complaint, except for the causes of action for declaratory relief, promissory estoppel, and unfair competition. During trial, Global withdrew its cause of action for violation of the Uniform Trade Secrets Act with the proviso that evidence supporting that cause of action could be used to support the unfair competition cause of action. The trial court denied Apex and Fischers motion for a nonsuit. After Apex and Fischer rested, the trial court granted Globals motion for a nonsuit on the cross-complaint on the ground of insufficiency of the evidence.

Against Apex, the jury rendered a verdict awarding Global $430,350 on its cause of action for breach of written contract. The jury returned verdicts finding Apex liable for breach of oral contract, breach of third party beneficiary contract, and quantum meruit but awarding Global zero damages on each of those causes of action. The jury returned verdicts finding liability for both intentional misrepresentation and concealment. The jury awarded Global $150,000 for intentional misrepresentation, but awarded zero damages for concealment. Although the jury found Fischer liable for both intentional and negligent interference with prospective economic advantage, it awarded Global zero damages for intentional interference and $50,000 for negligent interference. The jury found that Fischer acted with oppression, fraud, or malice while acting as an agent of Apex and imposed punitive damages against Apex and him in the amount of $125,000. No request was made to poll the jury.

After the jury rendered its verdicts, Global dismissed its causes of action for declaratory relief and promissory estoppel. On the unfair competition cause of action, the trial court issued a permanent injunction against Apex and Fischer enjoining them from interfering with Globals efforts to sell Cinch and from using any reports or research data prepared by Global.

Apex and Fischer each filed a motion for judgment notwithstanding the verdict and a motion for a new trial. The trial court denied all of the motions.

Judgment was entered in August 2009. Based on the jury verdicts, the judgment awarded Global damages of $430,350 on the causes of action for breach of written contract, breach of oral contract, quantum meruit, and breach of third party beneficiary contract, subject to a credit of $52,500 in Apexs favor for a good faith settlement with a prior party to the action. The judgment awarded Global damages of $150,000 against Apex and Fischer on the cause of action for intentional misrepresentation and concealment, and damages of $50,000 against Fischer on the cause of action for interference with prospective economic advantage. The judgment imposed punitive damages in the amount of $125,000 against Apex and Fischer and included the permanent injunction under Business and Professions Code section 17200.

In September 2009, Apex and Fischer filed separate notices of appeal from the judgment. Apexs appeal is case No. G042675, and Fischers appeal is case No. G042673.

Global moved to amend the judgment to find Fischer and Belgravia liable as alter egos of Apex and to add them to the judgment. In October 2009, the trial court granted the motion, finding "the evidence demonstrates that Fischer and Belgravia are the alter egos of deft. Apex" and "Fischer, and by extension, Belgravia, have had control over this litigation." At the same time, the court awarded Global attorney fees in the sum of $675,114.31, and, after granting in part Apex and Fischers motion to tax costs, awarded Global costs in the sum of $60,747.73.

On October 23, 2009, Apex, Fischer, and Belgravia filed a notice of appeal from an "Amended Judgment based on Order of Judge Gregory Munoz dated October 8, 2009 to Amend Judgment entered on August 26, 2009." An amended judgment incorporating the alter ego rulings, attorney fees, and costs was not entered until November 23, 2009 (Amended Judgment). We treat the notice of appeal as validly filed after entry of judgment. (Cal. Rules of Court, rule 8.104(d)(1).) The appeal from the Amended Judgment is case No. G042934. We have issued an order consolidating all three appeals.

DISCUSSION

I.

Contract-based Causes of Action and Quantum Meruit

A. Introduction

The jury awarded Global $430,350 in damages for breach of written contract. The jury found Apex liable for breach of oral contract, breach of third party beneficiary contract, and quantum meruit, but found zero damages on those causes of action. The judgment and Amended Judgment awarded Global a total of $430,350 on all of those causes of action.

We conclude Global cannot recover for breach of written contract because Audaxs acquisition of Winchester closed more than 18 months after the termination date of the Agreement and there was no evidence of a written contract renewal or modification to extend the term. Thus, under the plain terms of the Agreement, Apex was not obligated to pay Global a success fee.

Globals inability to uphold its recovery under the breach of written contract cause of action does not mean reversal: We affirm the $430,350 in contract-based damages under the quantum meruit cause of action. But with no recovery for breach of written contract, Global cannot recover attorney fees, as they were based on the attorney fees provision in the Agreement. As a result, we must reverse Globals award of attorney fees.

B. Global Cannot Recover for Breach of Written Contract.

Apex argues the judgment on the breach of written contract cause of action must be reversed for several reasons. We need only address one: Audax acquired Winchester more than 18 months after the Agreement terminated, and the Agreement did not permit oral amendments.

1. Expiration Provisions in the Agreement

Paragraph 2 of the Agreement provided, in relevant part: "This Agreement shall terminate twelve (12) months from the date hereof, unless otherwise renewed in writing by the parties. . . . Termination shall not affect [Apex]s obligation to pay [Global] its fees otherwise payable hereunder with respect to the closing of any transaction introduced or brought to [Apex]s attention by [Global] pursuant to this Agreement within eighteen (18) months of the termination date. Said time frame shall be extended if any agreement or transaction is delayed for purposes of avoiding payment of a fee payable hereunder."

The Agreement stated it terminates 12 months from its effective date. The termination did not affect Apexs obligation to pay a success fee to Global if a qualified transaction were closed within 18 months of the termination date.

No extrinsic evidence was received to interpret paragraph 2 of the Agreement; we therefore independently construe paragraph 2 from the writing alone. (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955.) Our goal is to give effect to the parties mutual intent at the time of contracting based on the writing and giving the words of the contract their ordinary and popular meaning. (Ibid.) "The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity." (Civ. Code, § 1638.)

The Agreement is dated January 6, 2003. Under the plain language of paragraph 2, the Agreement terminated 12 months later, on January 6, 2004. No evidence was presented of a written renewal. Eighteen months from the termination date of January 6, 2004 is July 6, 2005. Audaxs purchase of Winchester closed in June 2006, more than 18 months beyond the Agreements termination date. Thus, under the plain language of the Agreement, Apex was not obligated to pay Global a success fee.

Paragraph 7 of the Agreement provides that "[a]ny amendment to this Agreement shall be in writing." No evidence was submitted of any written amendment to extend the Agreements term.

2. Globals Theories to Overcome Term of the Agreement

To overcome the term of the Agreement and uphold the award of damages for breach of written contract, Global posits several theories on appeal. We address each theory. We note at the outset Globals respondents brief fails to include any record citations to support its theories to uphold recovery for breach of written contract.

a. Implied-in-fact Contract

First, Global argues, "the evidence unambiguously demonstrated that the parties treated the Agreement as continuing in full force and effect, creating an implied-in-fact contract." An implied-in-fact contract arises from the parties manifestation of assent through conduct. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 102, p. 144.) As Apex argues, Global did not sue for breach of an implied-in-fact contract. Global did not offer a jury instruction on an implied-in-fact contract. (See CACI No. 305.)

b. Equitable Estoppel

Global argues Apex is equitably estopped from asserting the Agreement had terminated when Audax acquired Winchester. Equitable estoppel arises from statements or conduct of the party to be estopped: "Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it." (Evid. Code, § 623; 13 Witkin, Summary of Cal. Law, supra, Equity, § 190, p. 527.)

At trial, Apex and Fischer offered a proposed jury instruction on equitable estoppel. The court refused to give it, likely because equitable estoppel is a nonjury question. (13 Witkin, Summary of Cal. Law, supra, Equity, § 191, p. 529.) Global does not assert it submitted the issue of equitable estoppel to the trial court for decision, and nothing in the record indicates a finding on the issue of equitable estoppel was ever made. (Global dismissed its cause of action for promissory estoppel, but that is a different kind of estoppel.) Also, equitable estoppel must be pleaded, either as part of the cause of action or as a defense (ibid.), and Global did not plead equitable estoppel.

c. Waiver

Global argues Apex waived the termination provision in May 2006 by requesting an invoice from Global. Contract provisions and conditions, including timeliness provisions, can be waived by the party for whose benefit they are made. (Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, 1339.) "[T]he party whose duty is dependent upon the other partys performance of a condition may make his or her duty independent, binding the party to perform unconditionally." (1 Witkin, Summary of Cal. Law, supra, Contracts, § 823, p. 912.) The waiver may be express or implied by conduct. (Ibid.)

At trial, Global did not offer a jury instruction on the factual issue of waiver. (See Hefferan v. Freebairn (1950) 34 Cal.2d 715, 722 ["waiver raises an issue of fact to be decided after a consideration of all the circumstances of the particular case, and is a question primarily for the trial court"].) In the respondents brief, Global does not explain whether and how it presented its waiver claim to the jury or otherwise preserved it for appellate review.

d. Novation

Global argues the evidence at trial supported "the legal theory of oral novation and substitution of a new agreement and rescission of the limited term of the Agreement." Novation is defined as "the substitution of a new obligation for an existing one." (Civ. Code, § 1530.) The substitution must be made by agreement with the intent to extinguish the prior obligation. (Wells Fargo Bank v. Bank of America (1995) 32 Cal.App.4th 424, 431.) "Novation is made by contract, and is subject to all the rules concerning contracts in general. [Citation.] A novation thus amounts to a new contract which supplants the original agreement and completely extinguishes the original obligation . . . ." (Ibid.)"The intention of the parties to extinguish the prior obligation and to substitute a new agreement in its place must clearly appear." (Hunt v. Smyth (1972) 25 Cal.App.3d 807, 818.)

Global provides no record references at all in support of its novation theory. Moreover, if there were a novation, the Agreement, along with its attorney fees provision, would be extinguished, leaving an oral agreement. Thus, a novation theory ultimately would not support Globals recovery for breach of written contract and would not permit Global to recover attorney fees.

e. Oral Modification

Despite the provision in the Agreement requiring modifications to be in writing, Global argues the Agreement was modified through subsequent oral agreements pursuant to Civil Code section 1698, subdivisions (b) and (c). Section 1698, subdivision (b) provides, "[a] contract in writing may be modified by an oral agreement to the extent that the oral agreement is executed by the parties." The term "executed" means the agreement must have been fully performed on both sides. (Lockheed Missiles & Space Co. v. Gilmore Industries, Inc. (1982) 135 Cal.App.3d 556, 559; see also Civ. Code, § 1661 ["An executed contract is one, the object of which is fully performed"].) Global neither provides record citations in support of its argument of an oral modification agreement nor identifies the terms of such an oral agreement.

Civil Code section 1698, subdivision (c) provides, "[u]nless the contract otherwise expressly provides, a contract in writing may be modified by an oral agreement supported by new consideration." (See also Marani v. Jackson (1986) 183 Cal.App.3d 695, 704 [oral modification of a written contract is allowed only if the written contract does not contain an express provision requiring that modification be in writing].) The Agreement "otherwise expressly provides" by requiring any modification to be in writing. In addition, Global provides no record citations to show new consideration.

Apex repeatedly argues the trial court erred by refusing to give Apexs requested instruction that the no-oral-amendments provision of the Agreement prohibited any oral amendments as a matter of law. We do not reach the issue because under the record presented to us, the judgment for breach of written contract cannot be upheld. We note, however, Apexs proposed instruction is erroneous because under Civil Code section 1698, subdivision (b), a written contract may be modified by a fully executed oral agreement notwithstanding a contractual provision barring oral amendments.

f. Extension of Time by Delay

Finally, Global argues Apex delayed closing the Winchester transaction to avoid paying the success fee. The sum total of Globals delay argument is this single sentence: "Fifth, Apexs conduct in delaying closing of the Winchester transaction because it lacked funding therefor, also amounts to a delay which should not prejudice Global as excepted from the term per the Agreement, paragraph 2."

The Agreement provides the timeframe under which Global would be entitled to a success fee "shall be extended if any agreement or transaction is delayed for purposes of avoiding payment of a fee payable hereunder." Global provides no citations to the record to support the assertion Apex delayed closing the Winchester transaction to avoid paying the success fee. Global did not offer a jury instruction on delay and does not explain whether and how it presented that issue to the jury for determination.

C. Attorney Fees

None of the arguments advanced by Global saves its recovery for breach of written contract. The only basis for Globals recovery of attorney fees was the attorney fees provision in the Agreement, and, in the respondents brief, Global offers no other ground for recovery of attorney fees. Because Global cannot recover for breach of the Agreement, we reverse the award of attorney fees.

D. Global Can Recover for Quantum Meruit.

Of the causes of action for breach of oral contract, breach of third party beneficiary contract, and quantum meruit, the contract damages can be affirmed on the quantum meruit cause of action. Because we are affirming the contract damages under the quantum meruit cause of action, we do not address arguments directed specifically to the breach of oral contract and breach of third party beneficiary contract causes of action.

"To recover on a claim for the reasonable value of services under a quantum meruit theory, a plaintiff must establish both that he or she was acting pursuant to either an express or implied request for services from the defendant and that the services rendered were intended to and did benefit the defendant." (Ochs v. PacifiCare of California (2004) 115 Cal.App.4th 782, 794.) The evidence at trial established Global provided services to Apex pursuant to its express request and that those services were intended to and did benefit Apex. Global provided extensive reports and data analysis to Apex, and participated in numerous meetings and conferences calls, to assist Apex in acquiring Winchester and Cinch. Global presented evidence the value of it services rendered for the Winchester transaction was $431,410—an amount almost the same as the damages awarded for breach of written contract. The evidence therefore supported Globals recovery for quantum meruit.

Fischer and Apex argue Global cannot recover for quantum meruit because the jury found the reasonable value of the services Global provided at Apexs request was zero. At oral argument, Fischer asserted the evidence supported that finding because Apex received no benefit from the work provided by Global inasmuch as Apex never acquired Winchester or Cinch. We disagree. An architects plans for a home cannot be said to have no value merely because the home was never built. "The legal test for recovery in quantum meruit is not the value of the benefit, but value of the services (assuming, of course, that the services were beneficial to the recipient in the first place)." (Maglica v. Maglica (1998) 66 Cal.App.4th 442, 446.) Globals services to Apex were of benefit to it in the first place because they led or contributed to Audaxs acquisition of Winchester, for which Apex received $1 million.

The jurys finding the reasonable value of Globals services was zero is explicable by the verdicts on the contract-based causes of action. The jury awarded Global $430,350 on its cause of action for breach of written contract. The jury found Apex liable for breach of oral contract and breach of third party beneficiary contract but found Global suffered zero damages under those causes of action. The trial court correctly construed the verdicts as reflecting the jurys determination to award damages for all of the breach of contract causes of action and quantum meruit once under the breach of written contract cause of action.

Apex and Fischer assert the trial court erred by approving the judgment in that manner. Because the jury awarded no damages on those causes of action, Apex and Fischer argue, "an essential element of th[ose] cause[s] of action (i.e. damages) was lacking and no judgment and no damages could have been awarded."

In denying Apex and Fischers motion to correct clerical errors in the judgment, the trial court stated: "While it may be somewhat ambiguous as to exactly which causes of action formed the basis for damages, it does not amount to clerical error which should be corrected. The jury was instructed not to award duplicative damage and its findings of liability and damages, with $0 in damages, on the other causes of action, would be consistent with that, as would the wording of the challenged portion of the judgment. In any event it would not amount to a clerical error, but a judicial error."

No judicial error occurred. If a jury verdict is ambiguous, the party adversely affected should object before the jury is discharged and request a more certain verdict. (Woodcock v. Fontana Scaffolding & Equip. Co. (1968) 69 Cal.2d 452, 456.) If the trial court has any doubt about the verdicts meaning, the court may ask the jury to correct the verdict. (Ibid.)If no objection is made before the jury is discharged, the trial court must interpret the verdict from its language in connection with the pleadings, evidence, and instructions. (Ibid.) If the trial court does not interpret the verdict, or interprets it erroneously, "[a]n appellate court will interpret the verdict if it is possible to give a correct interpretation, but will reverse if the verdict is hopelessly ambiguous." (Roby v. McKesson Corp. (2009) 47 Cal.4th 686, 705.)

As the trial court found, the jury verdicts on the breach of contract causes of action and quantum meruit cause of action are ambiguous on the matter of damages. However, neither Apex nor Fischer asked the jury to be polled, objected to the verdicts, or requested a correction or clarification before the jury was discharged. Their failure to do so amounted to a waiver of any ambiguity or defect. (Zagami, Inc. v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083, 1092, fn. 5.)

The trial court was called upon to interpret the verdict and did so correctly. In approving the judgment, the trial court reasonably concluded the verdict forms reflected the jurys intent to award the same damages on all the contract-based causes of action and quantum meruit. Globals damages evidence was essentially the same for all the contract-based causes of action and quantum meruit, and Global did not present different evidence or theories of damages for each of those causes of action. Thus, it was reasonable to conclude the jury intended for Global to recover $430,350 on all the contract-based causes of action and quantum meruit, but found zero damages on the breach of oral contract and breach of third party beneficiary causes of action, and no reasonable value of services under the quantum meruit cause of action only because it already awarded Global those damages for breach of written contract.

II.

Fraud/Concealment Cause of Action

A. Overview

Globals fraud cause of action asserted both intentional misrepresentation and fraudulent concealment of the Apex/Audax Agreement. The jury found Apex and Fischer liable for both intentional misrepresentation and fraudulent concealment but awarded damages only for intentional misrepresentation. The jury rejected Globals claim of false promise fraud, finding that Apex intended to perform "a promise to Global that was important to the transaction."

The parties argue at length whether the evidence supported the jurys finding that Apex and Fischer made misrepresentations on which Global relied to its detriment. It is not necessary to discuss those arguments and review the mass of evidence cited in the appellate briefs because we affirm the jurys verdict on the fraud cause of action based on fraudulent concealment.

B. The Judgment for Fraud Is Supported by Evidence of Concealment.

The elements of an action for fraud based on concealment are (1) the defendant concealed or suppressed a material fact, (2) the defendant was under a duty to disclose the fact to the plaintiff, (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff suffered damage. (Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 612-613.) In transactions not involving fiduciary or confidential relationships, a duty to disclose may arise when the facts are known or are accessible only to the defendant and the defendant knows the facts are unknown to, or not reasonably discoverable by, the plaintiff. (Id. at p. 613.) A duty to disclose may also arise when the defendant actively conceals discovery of the facts by the plaintiff. (Ibid.)

The jury found Fischer or Apex (1) intentionally failed to disclose an important fact that Global did not know and could not have reasonably discovered, and (2) intended to deceive Global by failing to disclose that fact. The evidence supported the jurys findings. Fischer and Apex concealed from Global the Apex/Audax Agreement and the negotiations leading to that agreement. Fischer never informed Global of the Apex/Audax Agreement. A duty to disclose arose because the Apex/Audax Agreement was not known to, or reasonably discoverable by, Global and, as the jury found, Apex and Fischer actively concealed the existence of the Apex/Audax Agreement. After entering into the Apex/Audax Agreement, Apex continued to seek Globals assistance in providing data and analysis regarding Winchester and Cinch.

Apex and Fischer argue they could not be liable for concealment because Global "always knew and was made aware that Audax was involved in the Winchester and Cinch transactions." Global of course knew Audax was involved in the transaction— the evidence supports a finding Global introduced Audax to Apex—but Global knew only that Audax might be a source of equity funding. Global did not know or have reason to know Audax rather than Apex would be the acquiring entity. Neither Fischer nor Audax informed Global of the Apex/Audax Agreement or of the ensuing negotiations between Audax and Northrop for the acquisition of Winchester.

Apex and Fischer argue they could not be liable for concealment because the Apex/Audax Agreement prohibited its disclosure to Global. The Apex/Audax Agreement included a freely negotiated nondisclosure provision prohibiting the disclosure of the terms of that agreement or of the negotiations leading to it, except for certain persons and entities including their "advisors and representatives of their advisors." The evidence supported a finding Global was an advisor to Apex. In thousands of pages of reports and memos and in numerous meetings and conferences, Global provided information and advice to Apex and Fischer. Further, Apexs very act of agreeing to a provision prohibiting disclosure of the Apex/Audax Agreement to Global is in itself a form of wrongful concealment. It was manifestly wrong for Apex to agree voluntarily not to disclose an agreement designed to defraud Global, and then argue it cannot be liable for fraudulent concealment because it was contractually prohibited from disclosing that selfsame agreement.

C. The Judgment Correctly Awarded the Fraud Damages for Both Intentional Misrepresentation and Concealment.

Apex and Fischer argue the judgment against them for damages based on fraudulent concealment must be reversed because the jury found zero damages for that claim. The trial court treated the fraud/concealment cause of action in a similar fashion as the contract-based causes of action and quantum meruit cause of action: The court awarded judgment "in favor of [Global] and against Apex on the sixth cause of action (intentional misrepresentation and concealment) of the Complaint jointly and severally against Apex and Fischer for the sum of $150,000.00."

As with the contract-based causes of action, the trial court found the jury verdicts were "somewhat ambiguous" as to which causes of action formed the basis for the award of damages. Since neither Apex nor Fischer asked the jury to be polled or objected to the verdicts before the jury was discharged, the trial court was called upon to interpret the verdicts for intentional misrepresentation and concealment (Woodcock v. Fontana Scaffolding & Equip. Co., supra, 69 Cal.2d at p. 456), and did so correctly. In approving the judgment, the trial court reasonably concluded the verdict forms reflected the jurys intent to award the same damages for both intentional misrepresentation and concealment. It was reasonable to conclude the jury intended Global to recover $150,000 on the fraud cause of action, and found zero damages for concealment only because it had already awarded Global those damages for intentional misrepresentation.

D. The Fraud Damages Are Not Duplicative. Apex and Fischer argue the jurys award of $150,000 on the fraud cause of action was duplicative of the damages awarded for breach of written contract. They argue, "plaintiffs written contract claim for a fee under the . . . Agreement was inclusive of any and all research data and materials supplied by Global (which it did not bill or charge for)."

A plaintiff seeking damages under both contract and tort theories from the same facts cannot recover under both theories. (Pugh v. Sees Candies, Inc. (1988) 203 Cal.App.3d 743, 760 & fn. 13.) Here, the jury was instructed that if it decided Global proved its breach of contract and fraud claims, "the same damages that resulted from both claims can be award only once."

The jurys award of $150,000 in damages on the fraud cause of action is not duplicative of the damages awarded on the breach of contract and quantum meruit causes of action. The measure of damages for fraud was the amount necessary to compensate Global for all harm that Apex and Fischers fraudulent conduct was a substantial factor in causing. (CACI No. 1923; see also Civ. Code, §§ 1709, 3333; Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1240-1241, 1249-1250.) The damages awarded for quantum meruit represent the value of the services Global rendered to Apex on the Winchester transaction. Globals fraud damages are the amount of harm Global suffered as a result of the concealment of the Apex/Audax Agreement, and that harm is not the same as or coextensive with the value of the services rendered on the Winchester transaction. For example, work performed by Global on the Cinch transaction, though arguably not recoverable on a breach of contract or quantum meruit theory, is recoverable on a fraud theory.

The evidence established that during the course of the negotiations between Apex and Audax, and after the Apex/Audax Agreement was entered into, Apex continued to seek Globals assistance in providing data and analysis regarding Winchester and Cinch. At Apexs request, Global generated and delivered to Apex at least 24 reports, and Apex requested Global to prepare a product-line analysis on the synergies of combining Winchester and Cinch in time for a March 10 conference call. Global continued to participate in conference calls with Apex and to communicate with Fischer. The cost of those services easily exceeded $150,000.

III.

Interference with Prospective Economic Advantage Cause of Action

The jury found that Fischer intentionally and negligently interfered with Globals actual or prospective economic relationship with Apex, Audax, or Cinch. The jury found zero damages for intentional interference with economic relations and awarded Global $50,000 in damages for negligent interference. We conclude Global cannot recover for interference with prospective economic advantage.

A. Elements of the Causes of Action

The elements of a cause of action for intentional interference with prospective economic advantage are (1) an economic relationship between the plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) the defendants knowledge of the relationship; (3) the defendants intentional and wrongful conduct designed to interfere with or disrupt this relationship; (4) interference with or disruption of this relationship; and (5) economic harm to the plaintiff proximately caused by the defendants wrongful conduct. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153-1154 (Korea Supply).)

The elements of a cause of action for negligent interference with prospective economic advantage are (1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to the plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship; (3) the defendant was negligent; and (4) such negligence caused damage to the plaintiff in that the relationship was actually interfered with or disrupted. (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.)

To recover for intentional or negligent interference with prospective economic advantage, a plaintiff must plead and prove "the defendants interference was wrongful by some measure beyond the fact of the interference itself." (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392-393; see also National Medical Transportation Network v. Deloitte & Touche (1998) 62 Cal.App.4th 412, 440.)

B. Global Cannot Recover for Interference with Prospective Economic Advantage.

Global asserted, and the jury found, Fischer interfered with Globals economic relationships with Apex, Audax, or Cinch.

1. Apex

The evidence showed Fischer interfered with Globals relationship with Apex by negotiating the Apex/Audax Agreement and concealing that agreement from Global. Fischer could not, however, be liable under a theory he induced breach of the Agreement because, as we have explained, Global cannot recover for breach of written contract. Further, any damage suffered by Global as a result of Fischers interference with its relationship with Apex would already be compensated under the quantum meruit and fraud causes of action.

2. Audax

As for Audax, the evidence at trial showed it ceased doing business with Global after it sued Audax in this litigation. (Audax was dismissed before trial.) Thus, there was no causal connection between Fischers actions and the cessation of business between Audax and Global. An Audax representative testified that, after the Winchester transaction, Audax continued to be interested in doing business with Global, which sent Audax a success fee agreement. Audax signed the agreement in June 2006 and returned it to Global, but it never signed. After Audax learned Apex had not paid Global, Audax did not request research reports from Global and did not enter into an annual retainer agreement, like the one Winchester had with Global. However, Winchester (now a subsidiary of Audax) continued to request reports from Global.

3. Cinch

Global asserted at trial Fischer interfered in an economic relationship with Cinch by filing a lawsuit against Cinch and Global seeking $95 million in damages. As to Cinch, the judgment for interference with prospective economic advantage cannot survive because substantial evidence did not support the jurys findings of (1) an economic relationship with Cinch containing the probability of future economic benefit, and (2) causation and damages.

To recover for interference with prospective economic advantage, the plaintiff must prove "the existence of an economic relationship with some third party that contains the probability of future economic benefit to the plaintiff." (Korea Supply, supra, 29 Cal.4th at p. 1164.) The tort protects the expectation the relationship will produce the desired benefit, not "the more speculative expectation that a potentially beneficial relationship will arise." (Ibid.)

Berbey testified that once Apex filed its lawsuit, prospective candidates interested in acquiring Cinch shied away or insisted the price for Cinch be lowered dramatically. Berbey testified, "[w]e have several success fee agreements with buyers who are looking for companies of that size." The relationship with those buyers had not progressed beyond the stage of initial due diligence. Global presented no evidence to show it was probable any of those potential buyers would purchase Cinch; Global showed nothing more than "the more speculative expectation that a potentially beneficial relationship will arise" (Korea Supply, supra, 29 Cal.4th at p. 1164).

Nor did Global submit evidence to support a finding of causation. While testifying at trial, Berbey was asked whether she had reason to believe the naming of Global in Apexs lawsuit against Cinch impacted Globals relationship with Cinch. She responded "no," because Cinch continued to receive information from Global under an annual retainer program. Berbey could not say for sure whether Apexs lawsuit against Cinch caused prospective buyers to lose interest. She testified: "The lawsuit that was filed in New York by Apex and Mr. Fischer for Cinch had to be part of the production of documents for these companies were interested in Cinch, so as soon as they saw that, they would not move forward on the transaction nor hire [Global]." But, she testified: "I cant speak for them, . . . they walked away for whatever reason. Thats the reason I attribute it to at the time." Finally, Global does not identify any damages caused by Fischers interference with an economic relationship with Cinch.

IV.

Injunction Under Business and Professions Code Section 17200

As part of the judgment, the trial court issued a permanent injunction against Apex and Fischer under Globals cause of action for unfair competition in violation of Business and Professions Code section 17200 (section 17200). The judgment enjoins Apex and Fischer "from interfering with [Global]s efforts to sell Cinch or any affiliate or division thereof and from using [Global]s research data and copyrighted reports, bound and unbound, transmitted or communicated to Apex and/or Fischer for use in connection with any potential transaction." We affirm the injunction.

Section 17200 prohibits "any unlawful, unfair or fraudulent business act or practice." The scope of section 17200 is broad. (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 (Cel-Tech). "Because Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent. "In other words, a practice is prohibited as unfair or deceptive even if not unlawful and vice versa." [Citation.]" (Ibid.)

Apex and Fischer argue they cannot be enjoined under section 17200 because they do not compete with Global. In support of that argument, Apex and Fischer rely on Berbeys testimony that Global had only one competitor, a man named Ron Bishop. Berbeys testimony must be read in context. Referring to Bishop, Berbey testified: "Hes an individual [who] came out of the industry out of a major connector company, and for the last twenty-five years hes been in the industry as well as focuses mainly on public information. [¶] His focus is on public companies. Our industry is mostly composed of private companies. [¶] Thats why companies like Apex are interested in entering our business." (Italics added.) Apex therefore was at least a potential competitor of Global and, more importantly, competed with Global by entering into the Apex/Audax Agreement.

Business and Professions Code section 17203 authorizes a court to enjoin a person who has engaged in "unfair competition," which section 17200 defines to include any unlawful, unfair, or fraudulent business act or practice. (Cel-Tech, supra, 20 Cal.4th at p. 180.) Thus, the relevant question is whether Apex and Fischer engaged in an unlawful, unfair, or fraudulent business act or practice in competition with Global. By entering into the Apex/Audax Agreement, Apex and Fischer directly competed with Global for the success fee to be paid when Winchester or Cinch were acquired. Apex and Fischer sought to undercut Globals right to the success fee and, in effect, to keep that fee for themselves upon acquiring Winchester and Cinch. That was direct competition.

Apex and Fischer argue they cannot be enjoined under section 17200 because they did meet the test articulated in Cel-Tech "that any finding of unfairness to competitors under section 17200 be tethered to some legislatively declared policy or proof of some actual or threatened impact on competition." (Cel-Tech, supra, 20 Cal.4th at pp. 186-187.) The Cel-Tech court expressly stated this test does not apply to the "unlawful" and "fraudulent" prongs of section 17200: "This case involves an action by a competitor alleging anticompetitive practices. Our discussion and this test are limited to that context. Nothing we say relates to actions by consumers or by competitors alleging other kinds of violations of the unfair competition law such as fraudulent or unlawful business practices or unfair, deceptive, untrue or misleading advertising." (Cel-Tech, supra, 20 Cal.4th at p. 187, fn. 12.)

Regardless whether Apex and Fischer engaged in some act threatening or harming competition, they may be enjoined under section 17200 if they engaged in an unlawful or fraudulent business act or practice. The evidence in this case established Apex and Fischer engaged in unlawful business practices. "A business practice is unlawful if it is forbidden by any law" (Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 827), and "[v]irtually any law—federal, state or local—can serve as a predicate for a section 17200 action. [Citation.]" (Smith v. Wells Fargo Bank, N.A. (2005) 135 Cal.App.4th 1463, 1480). "Section 17200 borrows violations from other laws by making them independently actionable as unfair competitive practices." (Korea Supply, supra, 29 Cal.4th at p. 1143.)

Apex and Fischer engaged in unlawful acts or practices by committing fraudulent concealment. Those unlawful acts or practices are sufficient to serve as the basis for a section 17200 claim.

V.

Punitive Damages

Apex and Fischer argue there was no evidence they engaged in malice, oppression, or fraud necessary to support an award of punitive damages. We have concluded substantial evidence supported the jurys finding that Apex and Fischer engaged in fraudulent concealment; therefore, we affirm the punitive damages.

VI.

Apexs Cross-complaint

Apexs cross-complaint against Global asserted causes of action for interference with prospective economic advantage, intentional misrepresentation, and negligent misrepresentation. At the close of Apexs case-in-chief, the trial court granted Globals motion for a nonsuit on the cross-complaint on the ground of insufficient evidence to support any of its causes of action. We affirm and conclude (1) as a matter of law, Apex failed to prove an economic relationship necessary to recover for interference with prospective economic advantage; (2) as a matter of law, the evidence was insufficient to support Apexs causes of action for intentional and negligent misrepresentation; and (3) the evidentiary error asserted by Apex was harmless.

A. Allegations of Apexs Cross-complaint

Apexs cross-complaint alleged Apex entered into a letter of intent to purchase Cinch from its owner, Safran, for $100 million. The parties agreed to a 90-day exclusivity period and to set aside time for due diligence. Some Safran executives sought to delay and obstruct due diligence to prevent its completion within the 90-day exclusivity period. As a result of due diligence, Apex made a revised offer to purchase Cinch for $85 million on condition the current chief executive officer (CEO) of Cinch would not be offered employment after closing. Safran accepted, and the parties reached an oral agreement.

At a meeting in February 2006, the CEO of Cinch and other Cinch managers portrayed Cinch in a negative manner and withheld positive information about Cinchs products, prospective sales, potential competition, and relationships with customers, in an attempt to dissuade Apexs financial sources from providing financing to purchase the company. In the weeks following the meeting, Berbey represented to Apex by telephone and by e-mails that she had been told by a member of Cinch senior management that (1) Cinchs CEO had directed Cinch managers to deliberately provide false, misleading, and excessively negative information; (2) Cinchs CEO had directed Cinch managers to withhold accurate and positive information at the February meeting; (3) Cinchs CEO intended to prevent Apexs acquisition of Cinch; (4) Cinchs CEO told Cinch managers they would lose their job if the acquisition was completed; and (5) Cinch managers had misrepresented the facts of a major product line and had failed to disclose the true situation of two key customers.

After Apex contacted Safran to advise it of the information obtained from Berbey, Apex and Safran agreed to hold another meeting. At this meeting, certain Cinch managers continued to make false and misleading statements about Cinch products and its situation with key customers. As a result of this meeting, Apexs financing sources refused to proceed with the Cinch acquisition. Apex advised Safran the misconduct of the Cinch CEO and others had made it impossible for Apex to proceed with the transaction.

In reliance on Berbeys alleged misrepresentations to Apex, Apex filed suit against Safran, Cinch, and certain members of Cinch senior management in New York for a host of tort causes of action. Apex sought at least $95 million in damages.

During the 18 months after Cinch filed the lawsuit in New York, Berbey contacted Cinch and Safran on many occasions and falsely informed them the representations she had made to Apex were untrue. She did so, according to the cross-complaint, to undermine Apexs legal position and ultimate recovery in its suit against Safran. For the same reason, Berbey also disparaged Apexs ability to obtain financing necessary to acquire Cinch.

The cross-complaint alleged, as a result of Berbeys actions, Apex recovered far less in the lawsuit against Safran and Cinch than the $95 million in damages Apex had sustained and incurred over $400,000 in legal fees and costs.

Apexs interference cause of action is inconsistent with its intentional and negligent misrepresentation causes of action. In the misrepresentation causes of action, Apex alleged Berbey made representations to Apex that were false, while in the interference cause of action, Apex alleged those representations were true. In its reply brief, Apex acknowledges this inconsistency: "The evidence showed that representations of [Global] about misconduct at Cinch were either untrue to begin with, in which case Apex was damaged in needlessly incurring over $404,000 in legal fees and expenses. Or, if [Global]s representations were true to begin with, Apex was damaged when the initial representations were falsely retracted by [Global] and Apex was compelled to settle its New York action against Cinch and Safran for only $350,000, which was substantially less than it otherwise might have recovered."

B. Standard of Review

We review an order granting nonsuit de novo, using the same standard as the trial court. (Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291.) A defendant is entitled to a nonsuit if the court determines, as a matter of law, the evidence presented by the plaintiff is insufficient to permit a jury to find in the plaintiffs favor. (Ibid.) The court must not weigh the evidence or consider witness credibility; must accept as true the evidence most favorable to the plaintiff; and must draw every reasonable inference, and resolve all presumptions, conflicts, and doubts, in the plaintiffs favor. (Ibid.)Evidence is legally insufficient when no substantial evidence exists tending to prove each element of the plaintiffs claim. (Adams v. City of Fremont (1998) 68 Cal.App.4th 243, 263; Fountain Valley Chateau Blanc Homeowners Assn. v. Department of Veterans Affairs (1998) 67 Cal.App.4th 743, 750-751.)

We may affirm a nonsuit on any ground specified in the motion, regardless whether the trial court relied on that ground. (Lawless v. Calaway (1944) 24 Cal.2d 81, 92-94; Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1542.)

C. The Evidence Was Insufficient as a Matter of Law to Support the Cross-complaint.

1. Interference with Prospective Economic Advantage

To recover for interference with prospective economic advantage, Apex had to prove the existence of an economic relationship with a third party with the probability of future economic benefit. (Korea Supply, supra, 29 Cal.4th at p. 1153.) Apex failed as a matter of law to prove such an economic relationship.

Apex asserts such an economic relationship was its lawsuit against Safran and Cinch. Apex alleged Berbey disrupted that relationship by contacting Safran and advising it her representations to Apex forming the basis for Apexs lawsuit were false. She did so, Apex alleged, to undermine its legal position and thwart its recovery in that lawsuit. As a result of Berbeys actions, Apex recovered far less in the lawsuit than the amount of its damages.

Apexs litigation against Safran and Cinch was not an economic relationship; it was an adversarial one. (Hepe v. Paknad (1988) 199 Cal.App.3d 412, 420 ["Hepes interest in an unlitigated claim for punitive damages and in a possible, future judgment that may or may not remain enforceable after a defendants bankruptcy are not the sort of economic relationships that the interference tort has traditionally protected"].) Apex has cited no authority to support the proposition that litigation is an economic relationship protected by the interference tort. The California Supreme Court has declined to expand the tort of interference with prospective economic advantage beyond "the expectancies involved in ordinary commercial dealings." (Youst v. Longo (1987) 43 Cal.3d 64, 74-75 [declining to extend tort to interference in competitive contest]; see also Blank v. Kirwan (1985) 39 Cal.3d 311, 330-331 [declining to extend tort to citys decision not to grant license to operate a poker club].) Nothing in the historical development of the tort suggests it has been, or ever should be, extended to include litigation within the scope of protected economic relationships. (See Della Penna v. Toyota Motor Sales, U.S.A., Inc., supra, 11 Cal.4th at pp. 381-392.)

2. Intentional and Negligent Misrepresentation

In the causes of action for intentional and negligent misrepresentation, Apex asserted that Berbey made representations to Apex, and, in reliance on those representations, Apex filed suit against Safran and Cinch. The elements of a fraud cause of action are (1) a false representation, (2) knowledge of falsity, (3) intent to induce reliance on the false representation, (4) justifiable reliance, and (5) resulting damages. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) The elements of a negligent misrepresentation cause of action are the same with the exception for element (2) that the representation was made without reasonable grounds for believing it to be true. (Fox v. Pollack (1986) 181 Cal.App.3d 954, 962.)

We conclude the evidence was insufficient as a matter of law to prove falsity and intent to induce reliance.

Apexs complaint against Safran and Cinch alleged: "On February 22, 2006, on an unsolicited basis, Savage contacted Ms. Monalisa Berbey, of [Global], and told her that Murray directed Savage and the other Cinch management team members to deliberately provide false, misleading and excessively negative information and withhold accurate, balanced or positive information at the February 16, 2006 meeting, in furtherance of Murrays deliberate attempt to prevent the sale of Cinch from going forward."

The evidence established Berbey spoke with a vice-president of Cinch and, in at least one letter and in a series of e-mails and telephone conversations, related the substance of those conversations to Fischer. The most important of those communications were an e-mail Berbey sent to Fischer on February 22, 2006 and a letter Berbey sent to Fischer on March 27, 2006. In those communications, Berbey informed Fischer the Cinch vice-president had told her Cinch executives had provided misinformation to Apex and had withheld positive information to prevent Apex from acquiring Cinch.

Apex failed, however, to present evidence at trial to prove Berbeys representations were false. Berbey testified her communications with Fischer accurately reflected what the whistleblowing Cinch vice-president had told her. The whistleblowing Cinch vice-president did not testify. No Safran or Cinch officer or employee testified. Fischer did not have personal knowledge of the information related to him by Berbey. Apex contends Fischer testified that Berbey retracted or disavowed her representations to him, but Apexs record citations do not support that assertion. Fischer testified another Cinch executive came forward and corroborated what the whistleblowing Cinch vice-president had told Berbey.

Apexs claim that Berbeys representations were false is based on Berbeys statements to Safran supposedly retracting or disavowing her representations to Apex. Berbey testified, however, she never spoke with anybody at Safran or Cinch about the substance of her representations to Apex, her conversations with the whistleblowing Cinch vice-president, or the allegations of Apexs lawsuit against Safran and Cinch.

Apex argues Berbeys trial testimony was impeached by her deposition testimony, at which she was asked whether she spoke with anyone at Cinch about her February 22, 2006 e-mail to Fischer. In her deposition testimony, read into the record at trial, Fischer asked a very lengthy (and confusing) question, after which Globals counsel stated, "[s]o if you want to ask did she have a conversation with Cinch about the e-mail, is that what you are asking?" Berbey responded as follows: "Yeah. I never said the Cinch information was false or misleading about the e-mail. How the information was related, how you presented it in your lawsuit against them is not exactly the manner in which it was related to me by what you are calling the whistle blower."

This passage from Berbeys deposition transcript was not enough to defeat a motion for a nonsuit. It is unclear from Berbeys obtuse response "[y]eah" whether she meant yes, that was the question Fischer was trying to ask, or yes, I did speak with someone at Cinch. In either case, the next statement—"I never said the Cinch information was false or misleading about the e-mail"—confirms Berbey did not retract or disavow her representations made to Apex. From Berbeys trial testimony and deposition testimony, a reasonable inference could not be drawn that Berbey spoke with Cinch and Safran about the allegations of Apexs complaint in New York and disavowed the representations attributed to her.

In its reply brief, Apex argues a letter dated July 3, 2006 impeached Berbeys testimony because, in that letter, Berbey told Fischer she would be contacting Cinch and Safran. Apex reads the letter out of context. In that letter, Berbey made a demand on Apex to pay the success fee due for the Winchester transaction and wrote that if Apex did not wire transfer the $285,000 success fee by a certain date and time, Global would have no choice but to contact Audax, Winchester, various lenders, and "others, including but not limited to" Safran, Cinch, "and any other candidates brought to your attention by [Global]." The letter did not state Berbey had contacted Safran or Cinch and therefore does not impeach her testimony that she did not contact them.

In addition, Apex failed to produce evidence of Berbeys intent to induce Apex to rely on her representations of what the whistleblowing Cinch vice-president told her. Berbey testified she spoke to the Cinch vice-president several times at Fischers insistence and, after she related to Fischer her initial conversation with the vice-president, Fischer asked that she memorialize the conversation in writing. Berbey told Fischer she did not feel comfortable doing so, but he was insistent and "was almost screaming at [her] to do this." She agreed to memorialize the conversation in writing on condition "[i]t will not go anywhere else but to the lenders." Fischer agreed. He did not contradict this testimony when testifying about his conversations with Berbey. She testified, without contradiction, her intent in telling Fischer about her conversations with the whistleblower was "to get the deal done."

D. Any Evidentiary Error Was Harmless.

Apex argues the trial court erred by not allowing it to introduce the following evidence in support of the cross-complaint: (1) testimony by Fischer comparing the allegations of Apexs complaint against Safran and Cinch with Berbeys e-mail regarding the misconduct of Cinch executives; (2) a summary of damages sustained by Apex under its interference with prospective economic advantage cause of action; and (3) copies of invoices and expenses incurred by Apex in prosecuting the lawsuit against Safran and Cinch.

Any error in disallowing this evidence was harmless. The jury could compare the allegations of Apexs complaint against Safran and Cinch with the content of Berbeys e-mails without Fischers assistance. Apex failed to produce sufficient evidence to prove the content of Berbeys e-mails was false. Apex cannot, as a matter of law, recover for interference with prospective economic advantage against Global, and, therefore, any error in refusing to receive the damages summary on that cause of action was harmless. For the same reason, any error in refusing to receive in evidence the copies of invoices and expenses incurred by Apex in its litigation against Safran and Cinch was harmless.

VII.

Asserted Attorney Misconduct

Apex and Fischer assert Globals counsel violated a court order three times by referring to a lawsuit Apex filed in Canada against Berbey. Apex and Fischer argue such alleged misconduct was sufficient to warrant a new trial. We conclude (1) Apex and Fischer failed to preserve their claim of misconduct; (2) only one of the three asserted instances of attorney misconduct arguably constituted misconduct; and (3) the one instance of arguable attorney misconduct was harmless.

Misconduct of counsel is an "[i]rregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial." (Code Civ. Proc., § 657, subd. 1; see also City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 870.) Attorney misconduct justifies a new trial only if it is reasonably probable the party moving for a new trial would have obtained a more favorable result absent the misconduct. (Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 801-802.)

At the outset of trial, Apex and Fischer moved in limine for an order precluding evidence of Apexs recently filed Canadian lawsuit against Berbey. The trial court denied the motion and permitted evidence of the Canadian lawsuit for impeachment "only for the purpose of showing bias and prejudice." Apex and Fischer argue Globals attorney committed misconduct by violating that order three times, as follows:

1. In opening statement, Globals counsel, while addressing the cross-complaint, stated: "Now were responsible for that as well, and compounding that last Wednesday when we were in court, he provided Miss Berbey a separate lawsuit wherein he names Miss Berbey." The court sustained an objection based on the motion in limine.

2. Globals counsel asked Fischer during cross-examination whether in the cross-complaint Apex was claiming that Global interfered with Apexs lawsuit against Safran and Cinch. Fischer answered, "[i]nterfered with the lawsuit and falsely retracted the prior statements, yes." Globals counsel then asked: "You havent stopped there. Youve now sued Miss Berbey." When Apexs counsel and Fischer objected, Globals counsel stated, "[t]his is impeachment." An unreported sidebar followed, after which questioning resumed without a ruling on the objection.

3. During cross-examination, Fischer asked Berbey, "[d]id Apex offer you $950,000 if Cinch closed?" Berbey answered: "With conditions and terms of not selling it to someone else, and if I interfered, I will be sued, and now I have to hire an attorney in Canada recently for the same comments you made in this letter." The trial court granted a motion to strike the answer after the words "conditions and terms." Later, Fischer asked Berbey whether she was seeking revenge, to which Berbey responded, "maybe you are the one thats having revenge with the three lawsuits filed against me." The trial court granted Fischers motion to strike that statement as nonresponsive.

Apex and Fischer waived their assertion of attorney misconduct because in none of these instances did they object and ask the trial court to admonish the jury. (Sabella v. Southern Pac. Co. (1969) 70 Cal.2d 311, 318.) ""As the effect of misconduct can ordinarily be removed by an instruction to the jury to disregard it, it is generally essential, in order that such act be reviewed on appeal, that it shall first be called to the attention of the trial court at the time, to give the court an opportunity to so act in the premises, if possible, as to correct the error and avoid a mistrial. Where the action of the court is not thus invoked, the alleged misconduct will not be considered on appeal, if an admonition to the jury would have removed the effect." [Citation.]" (Ibid.)This was not the ""extreme case[]"" in which an admonition to the jury would not have corrected any effect of the asserted misconduct. (Ibid.)

The question posed by Globals counsel to Fischer in cross-examination was legitimate impeachment, reasonably calculated to show prejudice, and therefore did not violate the trial courts order on the motion in limine. Berbeys testimony in cross-examination is not attorney misconduct. Apex and Fischer cite nothing from the record to suggest Berbeys mention of being sued was the product of misconduct by Globals counsel.

Of the three asserted instances of attorney misconduct, only the first— referring to the Canadian lawsuit in opening statement—arguably constituted misconduct. This single instance was a brief and somewhat ambiguous comment made at the outset of a lengthy trial involving days of testimony and dozens of exhibits. Absent this one comment, it was not reasonably probable Apex or Fischer would have obtained a more favorable result at trial.

VIII.

Addition of Belgravia and Fischer as Judgment Debtors

After entry of judgment, Global moved to add Belgravia and Fischer as judgment debtors pursuant to Code of Civil Procedure section 187 under the theory they were the alter egos of Apex. The trial court granted the motion and found (1) "the evidence demonstrates that Fischer and Belgravia are the alter egos of . . . Apex," (2) "failure to disregard Apexs corporate status would sanction a fraud and promote injustice," and (3) "Fischer, and by extension, Belgravia, have had control over this litigation." The trial courts alter ego finding is reviewed for substantial evidence. (Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 837.)

"Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. [Citations.] A corporate identity may be disregarded—the corporate veil pierced—where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation liable for the actions of the corporation. [Citation.] Under the alter ego doctrine, then, when the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, the courts will ignore the corporate entity and deem the corporations acts to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners. [Citations.]" (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538 (Sonora).)

Two requirements must be met to invoke the alter ego doctrine: (1) "[T]here must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist"; and (2) if the acts in question are treated as those of only the corporation, the result will be inequitable. (Sonora, supra, 83 Cal.App.4th at p. 538.)

Among the factors to be considered in applying the alter ego doctrine are (1) commingling of funds and other assets, (2) the holding out by one entity that it is liable for the debts of the other, (3) identical equitable ownership in the two entities, (4) use of the same offices and employees, (5) use of one entity as a mere shell or conduit for the affairs of the other, (6) inadequate capitalization, (7) disregard of corporate formalities, (8) lack of segregation of corporate records, and (9) identical directors and officers. (Sonora, supra, 83 Cal.App.4th at pp. 538-539.) "No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied." (Id. at p. 539.)

Apex was incorporated in Ontario, Canada, in 1999. Apexs stock is owned by two shareholders: Since October 1999, Belgravia has owned 50 percent of Apex stock, and Tombstone Capital Inc. (Tombstone) has owned the other 50 percent. Tombstone is not owned by, controlled by, or related to Fischer. Ian Sullivan was a director and officer of Apex from October 1999 to April 2008. Fischer has been a director and officer of Apex since October 1999, and since August 2007 has been its general counsel.

Belgravia was incorporated in 1995 and has issued 199 shares of common stock. Since August 2003, Fischer has owned one share of Belgravia common stock in trust for his minor son. Since August 2005, Fischers wife has owned 100 shares (50.3 percent) of the common stock of Belgravia, and Fischer has owned an additional 97 shares of the common stock of Belgravia in trust for his minor son. Fischer outright owns one share of the common stock of Belgravia and is its only director and officer.

The finding Belgravia was Apexs alter ego fails for the fundamental reason of lack of unity of interest. Belgravia owns only half of Apexs stock. The other half is owned by Tombstone. The managing director of Tombstone was Sullivan. There was no evidence presented that Belgravia exercised any control over Tombstone or Sullivan.

Global cites no authority for the proposition that unity of interest may be found based on 50 percent ownership of the defendant corporation. In Consolidated etc. Industries v. Marks (1952) 109 Cal.App.2d 310, 314, the court rejected a finding of alter ego in that situation: "Respondents have not pointed to any direct evidence in support of such finding but rather argue that Marks as vice president, director and holder of one half of Atlas outstanding stock had complete control of the corporation and that therefore Atlas was a mere instrumentality of Marks. However, such factors do not of themselves support a finding that Atlas was the alter ego of Marks or that the corporation was only an instrumentality by which he sought to evade his agreement. There is neither affirmative proof nor direct inference from competent evidence to show such unity of interest and ownership as would indicate that the Atlas corporation and Marks are effectually the same. In the absence of such proof the corporation will be regarded as a separate entity."

Notwithstanding the putative alter ego owns only 50 percent of the shares of the defendant corporation, unity of interest might exist if it can be shown the putative alter ego dominated and controlled the other shareholder or the corporation itself. But, as we have explained, Global presented no evidence of Belgravias domination or control of Tombstone, or that Tombstone assisted Belgravia in using Apex as a conduit for its own activities. Until 2008, both Fischer and Sullivan were officers and directors of Apex. Belgravia did not hold itself out as liable for Apexs debts.

In a declaration submitted in opposition to the motion to add judgment debtors, Sullivan stated: "Since its incorporation on October 14, 1999, including during my tenure as a director and officer, Apex . . . maintained a separate bank account and did not co-mingle any funds with any other corporation or those of any of its officers, directors or employees. Any and all payments that [were] made by Apex . . . were for legitimate corporate purposes . . . . Corporate decisions of Apex were made by the board of directors of the company, of which I was a member until April 21, 2008. Regular directors and shareholders meetings took place. Apex . . . did not and was not required to maintain a general ledger. Separate financial statements and Canadian income tax returns for Apex . . . were prepared by Feldman & Associates, Chartered Accountants, for the fiscal years 1999 to 2005 inclusive. Mr. Feldman is currently in the process of preparing and filing the financial statements and Canadian income tax returns of Apex . . . for 2006-2008 inclusive."

The trial courts decision to pierce Apexs corporate veil was based on findings that "Apex is quite clearly insolvent," Apex "had no corporate books or records that could be located" and no stock certificates, and "Apex was not adequately capitalized." Corporate insolvency in itself is not a relevant factor in deciding whether to pierce the corporate veil; one of the primary purposes and benefits of the corporate form is to protect shareholders from liability if the corporation cannot pay its debts. Apex was not capitalized at all but financed its operations with a $300,000 operating credit loan and a $2.5 million standby capital commitment from Palomino Capital Corporation. There was no evidence presented whether or not this loan and capital commitment were adequate capitalization.

Apex did produce some corporate records, including its articles of incorporation, bylaws, stock register, directors register, officers register, and stock certificate. Other corporate records were never produced. For example, Apex did not produce minutes of shareholders meetings and directors meetings, although Sullivan declared those meetings were held regularly.

The trial courts finding Apex had no corporate records was based on Fischers failure during trial to produce such records in response to court orders. In opposing the motion to add judgment debtors, Fischer submitted a declaration stating some of Apexs corporate records "were previously temporarily lost or misplaced when they were misfiled in the incorrect box at an offsite storage facility" and recently had been located. The trial court did not find the declaration credible. By ignoring Apexs corporate records and stock certificates (which showed Belgravia owned only half of Apexs stock), the trial court in effect imposed evidence and issue sanctions against Apex when no motion for sanctions was pending.

Substantial evidence therefore did not support a finding that Belgravia was the alter ego of Apex. Belgravia argues too it cannot be liable as the alter ego of Fischer (as a defendant) because the doctrine of outside reverse piercing of the corporate veil has been rejected in California. We agree. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510.)

Globals assertion Fischer is the alter ego of Apex is based on his ownership and control of Belgravia. Because Belgravia is not an alter ego of Apex, neither is Fischer.

DISPOSITION

We reverse the following:

1. Those portions of the Amended Judgment awarding Global attorney fees (Amended Judgment, paragraph (8), page 4, lines 7-9);

2. The portions of the Amended Judgment awarding Global damages for interference with prospective economic advantage (Amended Judgment, paragraph (4), page 3, lines 19-22); and

3. The order granting the motion to add Belgravia and Fischer as additional judgment debtors and those portions of the Amended Judgment awarding judgment against Belgravia and against Fischer as judgment debtors to Apex, specifically: Amended Judgment, paragraph (1), page 3, lines 8-9, the words "and, per Motion III, said award is also against Fischer and Belgravia Capital Corporation, a Canadian corporation (Belgravia)"; paragraph (2), page 3, line 10, the words "Fischer" and "Belgravia"; paragraph (3), page 3, lines 17-18, the words "and, per Motion III, said award is also against Fischer and Belgravia"; paragraph (4), page 3, lines 21-22, the words "and, per Motion III, said award is also against Belgravia"; paragraph (5), page 3, line 25, the words "and, per Motion III, said award is also against Belgravia"; paragraph (6), page 4, line 4, the words "and, per Motion III, said award is also against Belgravia"; paragraph (7), page 4, lines 5-6, the words "and, per the granting of Motion III, against Belgravia"; and paragraph (8), page 4, lines 8-9, the words "and, per the granting of Motion III, against Fischer and Belgravia."

In all other respects, and except as expressly provided, the judgment is affirmed. Belgravia shall recover its costs incurred only on its appeal of the alter ego determination. Respondent shall recover its costs incurred on appeal except for those costs related directly to Belgravias appeal.

FYBEL, J. WE CONCUR: BEDSWORTH, ACTING P. J. ARONSON, J.