Hana Micron, Inc. v. New Age International, LLC

Filed 8/22/08 Hana Micron, Inc. v. New Age International, LLC CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

APPEAL from an order of the Superior Court of Los Angeles County, Robert L. Hess, Judge. Affirmed.

Law Offices of James A. Kim and James A. Kim; Kim Park Choi & Yi and John H. Choi for Plaintiff and Appellant.

No appearancefor Defendants and Respondents.

INTRODUCTION

The trial court, after a bench trial, awarded plaintiff and appellant Hana Micron, Inc. (plaintiff) only $89,343.80 in damagesrather the $227,425.68 or $469,927.88 plaintiff soughton its breach of contract claim against defendants New Age International, LLC (New Age) and Michael Lee (collectively, defendants).[1] Plaintiff contends on appeal, in essence, that no substantial evidence supported the trial courts damage calculation. We conclude that plaintiff forfeited its right to substantial evidence review by failing to set forth in its brief material evidence tending to support the damage award. The record contains substantial evidence to support the damage award. We therefore affirm.

BACKGROUND[2]

A. Factual Background

Plaintiff was a Korean company that manufactured, among other things, USB flash drives. Woo Jin Shim was an assistant manager in plaintiffs planning department and was responsible for its dealings with New Age. New Age was in the business of marketing consumer electronics under the trade name Storix, among others. Its largest customer was Frys Electronics (Frys). Michael Lee was a founder and CEO of New Age, and was found by the trial court to be the alter ego of New Age.

Plaintiff engaged the services of Albert Oh[3]to help it break into the United States market. In December 2002, Albert Oh met Michael Lee through a mutual friend, and the two began discussing the possibility of New Age doing business with plaintiff shortly thereafter. In February 2003, Michael Lee and Albert Oh held a three-way conversation (presumably a conference call) with Woo Jin Shimplaintiffs representativeto discuss the possibility of New Age importing into the United States flash drives manufactured by plaintiff for resale to American retailers.

On March 10, 2003, New Age issued a purchase order to plaintiff for a total of 20,000 flash drives in three configurations (64 megabytes (MB), 128 MB and 256 MB), for a total purchase price of $670,000. The purpose of the order was to fulfill an order from Frys. Frys intended to advertise the units as part of a net zero rebate program. Under the net zero program, qualifying purchasers could claim a mail-in rebate for the full purchase price of the product, and thereby get the product for free.

The March 10 purchase order indicated that the units were to be shipped FOB Korea and failed to set forth payment terms. The March 10 order was subsequently revised to order 3,000 additional flash drives, bringing the total purchase price to $733,000.

On May 2, 2003, New Age issued another purchase order for 2,800 units, for a total purchase price of $85,200. The May 2 purchase order specified that payment was to be on a Net 60 basis. The shipping terms specified CIF Korea, but there was a handwritten slash through CIF and FOB? was written in beside it.

The goods subject to the March 10 purchase order were shipped to New Age from Korea in two shipments on April 2 ($323,000) and April 12 ($410,000); the goods subject to the May 2 purchase order were shipped in a single shipment on May 17, 2003 ($85,200). The April 2 and May 17 shipments were by air; the April 12 shipment was by sea. The invoices stated that the shipping terms for all three shipments were FOB Korea. The goods were received by New Age and a substantial number were delivered to Frys for resale, some of which Frys advertised and sold as being subject to the net zero rebate program. Some of the goods were delivered to another retailer, Micro Center, which also sold goods subject to a rebate program.

New Age paid plaintiff $262,141.12 by wire transfer toward the goods received in the April 2 shipment. That was the only payment made by New Age to plaintiff.

Disputes arose between plaintiff and New Age with respect to how freight costs and the costs of the rebate program should be allocated between them. In June 2003, New Age sent an invoice to plaintiff for $175,260, representing the amount of claims under Frys rebate program, less a five percent reserve.

In July 2003, Michael Lee of New Age and Woo Jin Shim of plaintiff, among others, met in Korea to resolve these disputes. The meetings were memorialized in Minutes dated July 19 and 23, 2003, subscribed by both parties. The trial court found these writings constituted an enforceable agreement resolving the parties disputes.

The July 19 Minutes provided:

        Plaintiff was to pay to New Age $175,260 toward rebate costs. The amount of the reserve would be settled by the companies after an audit of the rebate claims.

        Upon receipt of the $175,260 payment from plaintiff for rebate costs, New Age would pay to plaintiff $181,965 toward the goods shipped in the April 12 shipment.

        New Age was authorized to return 1,169 defective units for a credit of $46,253. New Age was also authorized to return an additional 3,865 of the 256 MB drives, apparently for an unspecified amount of credit. New Age was to bear the cost of shipping the returns.

        The payment due from New Age for the May 17 shipment would be determined after an agreement concerning returns from that shipment.

The July 23 Minutes provided:

        The parties would bear the costs of the Frys rebate program equally, and plaintiff would bear up to 75% of the costs of the Micro Center rebate program.

        The parties specified a price term for sales to Micro Center which permitted New Age to deduct $4,300 in marketing expenses.

        New Age was to provide packing lists for the authorized returns by a date certain; plaintiff would credit New Age for authorized returns within two days of verifying the quantity of the goods returned.

        The parties specified a procedure for New Age to notify plaintiff of future returns.

        The parties discussed possible sale of the returned 256 MB drives in Korea.

        New Age was to pay for the May 17 shipment, less returns, on August 14, 2003.

The trial court found that neither party fully performed the agreements set forth in the Minutes. Plaintiff remitted $175,260 to New Age, but the payment was delayed until mid-August. New Age did not remit the promised payment of $181,965 to plaintiff. New Age also claimed that plaintiff owed an additional $120,000 on the rebate program.

B. Procedural Background

Plaintiff sued defendants in April 2004. It filed its first amended complaint in April 2005, alleging causes of action for breach of contract, goods sold and delivered, an open book account and fraud. The trial court sustained defendants demurrer to the fraud claim with leave to amend, but no amendment was filed. The case was tried to the court on plaintiffs three remaining claims beginning in November 2006. Closing arguments were presented and the case submitted in January 2007.

The trial court issued a written tentative decision on May 1, 2007. Plaintiff requested a statement of decision, but only as to whether plaintiff was entitled to attorneys fees and prejudgment interest. Plaintiff did not request a statement of decision as to damage issues, nor did plaintiff object to the trial courts resolution of the damage issue in its tentative decision.

The trial court issued its statement of decision on June 7, 2007. The trial court stated that its task had been hampered by the failure of the parties to present any evidence from Albert Oh, and by their failure to submit documentary evidence relevant to several issues in the case. The trial court found that neither of the two witnesses who testifiedWoo Jin Shim and Michael Leewas completely credible, and that both had been impeached by prior inconsistent statements.

As relevant to this appeal, the trial court found that New Age owed plaintiff an unpaid balance for the goods sold and shipped to New Age of $89,343.80, consisting of the total price of the goods sold ($818,200) less an aggregate amount of credit due to New Age ($728,856.20) for the payment it made, returns, unpaid rebate contributions and freight costs. The trial court did not state the amount of credit due for each item. The trial court found for plaintiff on its claims for breach of contract and goods sold and delivered. The trial court found for New Age on the claim for an open book account. The trial court also concluded that Michael Lee was the alter ego of New Age. Neither party filed objections with respect to the statement of decision.

Judgment was entered in favor of plaintiff on July 9, 2007 in the amount of $89,343.80. Plaintiff timely appealed with respect to the damage award.

DISCUSSION

A. Standard of Review

Plaintiff contends primarily that there is no substantial evidence to support the trial courts damage calculation. Where findings of fact are challenged on a civil appeal, we are bound by the elementary, but often overlooked principle of law, that . . . the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, to support the findings below. [Citation.] We must therefore view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor . . . .   [Citation.] (Bickel v. City of Piedmont, supra, 16 Cal.4th at p. 1053.) Substantial evidence is evidence that is reasonable, credible and of solid value. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.) The ultimate test is whether it is reasonable for a trier of fact to make the ruling in question in light of the whole record. (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 652.) We must affirm the judgment if it is supported by substantial evidence, even though substantial contrary evidence also exists. (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 631.)

We review the trial courts evidentiary rulings for an abuse of discretion. (Employers Reinsurance Co. v. Superior Court (2008) 161 Cal.App.4th 906, 919.) We will reverse only if the trial courts ruling was arbitrary, capricious, or patently absurd and resulted in a miscarriage of justice. (Ibid.)

B. Plaintiff Forfeited Substantial Evidence Review

In its statement of decision, the trial court concluded that defendants were entitled to credits of $728,856.20 for payments by New Age, returns, rebate contributions owed by plaintiff, and freight allowances. The trial court did not specify the amount of credit due for each of these items, nor did the trial court specify the evidence it relied upon in performing its calculation. Plaintiff did not request a statement of decision on the damage issue, nor did plaintiff object to the statement of decision with respect to the trial courts damage calculation.

On appeal, plaintiffs essential contention is that the trial courts damage calculation was not supported by substantial competent evidence. Plaintiff forfeited that contention, however, by presenting to this court only the evidence favorable to its position. It is well established that a reviewing court starts with the presumption that the record contains evidence to sustain every finding of fact. [Citations.] [Appellants] contention herein requires [it] to demonstrate that there is no substantial evidence to support the challenged findings. [Citations.] A recitation of only [appellants] evidence is not the demonstration contemplated under the above rule. [Citation.] Accordingly, if, as [appellant] here contend[s], some particular issue of fact is not sustained, they are required to set forth in their brief all the material evidence on the point and not merely their own evidence. Unless this is done the error assigned is deemed to be waived. [Citations.] (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881; accord, Garlock Sealing Technologies, LLC v. NAK Sealing Technologies Corp. (2007) 148 Cal.App.4th 937, 951.)

Plaintiff asserts flatly in its brief that the trial courts award was not based on any evidence presented at trial . . . . Plaintiff sets forth in its brief no evidence tending to support the award. By doing so, plaintiff failed fairly to present the record.

First, plaintiff asserts that New Age and Michael Lee [a]dmitted to claiming only $227,425.68 in credits. That figure was derived by plaintiff from an e-mail sent by Michael Lee in late August 2003, and includes credits in the amount of $55,400 for rebate costs and $11,802 for freight allowances. Plaintiffs brief fails to mention, however, that plaintiffs first amended complaint alleged, andin a declaration under penalty of perjury submitted to the trial courtplaintiffs representative Woo Jin Shim declared that defendants owed only $216,234, which included a credit for rebate costs in the amount of $75,445.88. Further, plaintiffs brief does not cite, summarize or discuss other evidence submitted by defendants regarding additional credits that had been agreed upon between New Age and plaintiff prior to August 2003, and that were therefore not reflected in the August e-mail relied upon by plaintiff. Specifically, Michael Lee testified that plaintiff had agreed to give defendants additional credits of $46,253 for returns and $14,605.88 for freight allowances, both relating to the April 2 shipment. Those amounts, Michael Lee testified, were credited against the $323,000 invoiced by plaintiff for that shipment, and those credits were reflected in $262,141.12 payment made by New Age with respect to that shipment, which was intended to be payment in full. Michael Lee also testified that, as of the end of 2003, New Age was owed approximately $120,000not $55,400from plaintiff for rebate costs.

Second, plaintiff represents in its brief that defendants submitted to the trial court exhibit 76 to support their claim that only $89,343.80 was owed. Although true, this statement is incomplete. In presenting their damage calculation to the trial court during argument, defendants expressly relied not only on exhibit 76, but also exhibits 53, 72 (presumably meaning 73, the minutes comprising the July 2003 agreements), 75 and 77. Plaintiff does not mention exhibits 75 or 77 in its brief.[4] It appears from the reporters transcript that the trial court, in colloquy with defense counsel during argument, referred to those exhibits to verify how defense counsel had calculated plaintiffs damages. Furthermore, it appears that both parties prepared demonstrative exhibitsexhibits 91 and 92setting forth their damage calculations. Those exhibits (though presumably not received into evidence) have not been provided to assist our review of the record, nor has plaintiff elsewhere set forth the elements of defendants damage calculation.

Third, although plaintiff acknowledges defendants reliance on exhibit 76, the references to exhibit 76 in plaintiffs brief are not helpful. Exhibit 76 was not a single document. It was a collection of multiple documentsincluding e-mails, sales projections, purchase orders, prior declarations of the parties and other documentsmore than 100 pages in length, marked as a single collective exhibit.[5] Plaintiffs brief does not direct us to the portions of exhibit 76 relied upon by defendants for their damage calculation, nor does plaintiff discuss the merits of any contentions with respect to damages made by defendants in reliance on exhibit 76. Moreover, plaintiff did not include a complete copy of exhibit 76 in its appendixthe copy in the appendix omitted at least one potentially relevant page.[6]

Further, plaintiff has not accurately stated the record with respect to exhibit 76. Plaintiff states in its brief that [e]xhibit 76 was . . . the document plaintiffs counsel objected to on hearsay grounds. Fairly read, however, the only specific hearsay objection stated by plaintiff with respect to exhibit 76 applied only to page 104, not the entire exhibit. Further, plaintiff asserts that [e]xhibit 76 was never identified and admitted in the record. Although the index of the reporters transcript does not list exhibit 76 as being marked for identification or admitted into evidence, the index does not reflect that any of the exhibitsincluding those relied upon by plaintiffwere admitted into evidence. Both parties, however, referred to exhibit 76 during trial and used various portions of it when examining witnesses. At the close of evidence, neither party moved exhibits into evidenceinstead, the trial court instructed the parties to meet and confer with respect to the documents that were marked for identification and agree as far as possible to which ones are to be admitted. And then if one side wants some admitted and the other side objects, I will rule on the objections. There is no record that either party lodged objections to any exhibit, nor is there any record that the trial court ruled on any objections.

Because plaintiff failed to set forth in its brief and appendix all evidence material to the trial courts damage calculation, plaintiff has forfeited its right to substantial evidence review. On this basis we affirm the judgment. Nevertheless, we examined the record and concluded that there is substantial evidence to support the judgment. (Section C post.)

C. Substantial Evidence

We conclude that substantial evidence supported the trial courts damage calculation. As noted above, plaintiff did not request a statement of decision with respect to the trial courts damage calculation, nor did plaintiff object to the trial courts damage calculation in either the statement of decision or the trial courts tentative decision. Accordingly, we are required to infer any factual findings necessary to support the judgment. (Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 494, citing In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133; Code Civ. Proc., 634; see Fladeboe v. American Isuzu Motors, Inc. (2007) 150 Cal.App.4th 42, 59-60; see also In re Marriage of Hebbring (1989) 207 Cal.App.3d 1260, 1273-1274 & fn. 6.)

During closing argument, defense counsel presented defendants damage calculation in detail to the trial court. In doing so, defense counsel cited exhibits 53, 72 (probably intending to refer to exhibit 73), 75, 76 and 77.[7] Based on our review of those exhibits, we have been unable to reconstruct the precise damage calculation advocated by defendants and adopted by the trial court. Viewing the evidence most favorably to the judgment, however, it appears that direct evidence in the record supports a damage calculation as follows:

As noted above, Michael Lee testified that there were $14,605.88 of additional freight allowances with respect to the April 2 shipment that were not reflected in the August 30 e-mail (exhibit 53) relied upon by plaintiff. Moreover, the comparatively modest freight allowance of $11,802.20 set forth in exhibit 53 included amounts for all three shipments, including the April 2 shipment. Based on this evidence, the trial court reasonably could infer that exhibit 53 did not reflect all of the freight allowances due to New Age with respect to the April 12 and May 17 shipments. The April 12 shipment was larger than the April 2 shipment, but was shipped by the less expensive sea route; the May 17 shipment was (as the April 2 shipment) shipped by air, but it was a smaller shipment. Accordingly, the trial court could conclude that an additional freight allowance of approximately $12,000 for the April 12 and May 17 shipments was reasonable.

Plaintiff asserts that the facts supporting its own damage calculations are undisputed. As noted above, however, plaintiffs damage calculations were controverted not only by evidence submitted by New Age, but are also inconsistent with plaintiffs first amended complaint and a declaration of plaintiffs representative, Woo Jin Shim, submitted to the trial court.

Plaintiff asserts that no admissible evidence supported the trial courts damage calculation. Plaintiff argues first that any documents the trial court might have relied upon were inadmissible hearsay and were not authenticated. As noted above, plaintiff stated no such objections to the exhibits cited by defendants to support their damage calculation. Moreover, plaintiff fails to specify to which documents this argument applies.

Plaintiff also argues that the trial court might have admitted into evidence e-mail correspondence between Michael Lee and Albert Oh, to which plaintiff asserted hearsay objections. Plaintiff identifies only one such document in its briefpage 104 of exhibit 76which plaintiff did not include in its original appendix. We have obtained that document; it is irrelevant to the damage issue, and there is no indication in the record that the trial court relied on it for that purpose.

Plaintiff asserts that unspecified e-mails and out-of-court statements by unspecified declarants constituted inadmissible parol evidence. Plaintiff made no such objections at trial, and on appeal plaintiff specifies no particular evidence to which this argument might apply. Presumably, plaintiff again complains about e-mails and statements by Albert Oh, upon which defendants relied to support their trial contentions that Albert Oh bound plaintiff to a consignment agreement with all shipping terms CIF Korea. The trial court rejected the former contention, and found the latter contention irrelevant due to the agreements reached by the parties in July 2003. Such documents had no relevance to the trial courts damage calculation.

Finally, plaintiff asserts that defense counsels trial argument with respect to damages constituted improper testimony. Plaintiff made no objection to defense counsels argument at trial. In any event, as explained above, counsels argument was grounded on evidence that was before the trial court without objection.

DISPOSITION

The judgment is affirmed. Because defendants did not defend the appeal, no costs are awarded.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

MOSK, J.

We concur:

TURNER, P. J.

ARMSTRONG, J.

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[1] New Age did not file a respondents brief. We therefore resolve the appeal upon the record and plaintiffs opening brief. (Cal. Rules of Ct., rule 8.220(a)(2).)

[2] We state the facts in the light most favorable to the trial courts decision, resolving all conflicts and indulging all reasonable inferences to support the judgment. (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1053, abrogated on another ground as stated in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 100.) To the extent the trial courts findings are not challenged on appeal, we accept the facts set forth in the trial courts statement of decision. (See City of Merced v. American Motorists Ins. Co. (2005) 126 Cal.App.4th 1316, 1322-1323.)

[3] The parties disputed whether Albert Oh was acting as an agent of plaintiff with the authority to negotiate and agree to contract terms. The trial court found it unnecessary to resolve this dispute.

[4] Plaintiff also did not include exhibits 75 and 77 in its original appendix. We obtained and reviewed copies of these exhibits; it appears that different copies of the same documents were included in the appendix as part of exhibit 76 (though plaintiff did not so inform us, and does not discuss those portions of exhibit 76 in its brief). On our own motion, we order the record augmented with exhibits 75 and 77, and with plaintiffs request for a statement of decision and plaintiffs notice of errata of courts tentative decision. (Cal. Rules of Ct., rule 8.155(a)(1)(A).)

[5] The trial court recognized that this was not an ideal practice, and so admonished defense counsel. There is no indication in the record, however, that plaintiff objected to the exhibit on that basis, or that the trial court excluded it.

[6] Plaintiffs brief quotes a lengthy colloquy during trial concerning a hearsay objection asserted by plaintiff with respect to page 104 of exhibit 76. The objection was overruled by the trial court. Yet, page 104 was omitted from the appendix. We obtained a copy of the missing page, and order the record augmented to include it.

[7] Plaintiff did not object in the trial court to defense counsels argument or to the relevant portions of the exhibits defense counsel relied upon. Plaintiff thus forfeited any such objections. (DiPirro v. Bondo Corp. (2007) 153 Cal.App.4th 150, 177-178; Boyle v. CertainTeed Corp. (2006) 137 Cal.App.4th 645, 649; see also Evid. Code, 353, subd. (a).)