Playhut, Inc. v. United Development Enterprises

Filed 11/18/08 Playhut, Inc. v. United Development Enterprises CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Elizabeth A. Grimes, Judge. Affirmed.

Law Offices of Scott J. Nord and Scott J. Nord for Defendant and Appellant.

Pumilia Patel & Adamec, Justene M. Adamec, Jeffrey Lewis and Jayesh Patel for Plaintiff and Appellant.

INTRODUCTION

Playhut, Inc. (Playhut) sells toys to retail outlets. United Development Enterprises (UDE) manufactures toys for Playhut. Playhut sued UDE for breach of contract, claiming that UDE failed to perform several agreements to manufacture toys and, as result, Playhut suffered damages in excess of $3.6 million. UDE cross-complained for breach of contract, claiming that Playhut had failed to pay invoices of over $800,000. The matter was tried to the court. On Playhuts complaint, the trial court found no liability and entered judgment in favor of UDE. On UDEs cross-complaint, the trial court found that UDE had only proved unpaid invoices of $58,000 and entered judgment for that amount plus costs. Both parties appeal. We affirm the judgment in its entirety.

I. PLAYHUTS ACTION FOR BREACH OF CONTRACT

A. Statement of Facts

While considerable evidence (documentary and testimonial) was presented in the trial court devoted to giving a detailed background to the dispute and to interpreting multiple communications between the parties, the essential facts of the litigation can be summarized as follows.

Playhut designs and sells toys to retailers such as Walmart, Toys-R-Us and QVC (the on-line shopping channel). Since 2002, Playhut has contracted with four or five different companies (including UDE) in Xiamen, China to manufacture its products. UDE has 200 employees and manufactures for a number of American companies. UDE was Playhuts third largest supplier. UDE produced 19 percent of Playhuts needs in 2002, 18 percent in 2003, 23 percent in 2004 and 9 percent in 2005.

As set forth in the operative pleading (the second amended complaint) and its opening statement, Playhut claimed that UDE breached contracts made in 2005 and, as a result, Playhut was forced to place orders with other manufacturers at higher prices. Playhut claimed that many of the new orders arrived too late for sale during the holiday season, thereby disrupting its relationship with retail clients. Playhuts expert witness opined that Playhut suffered losses in excess of $3.6 million as a result of UDEs purported breach of contract.

Playhut decides where to place its orders with the Xiamen manufacturers based upon factory capacity and cost. Because Playhut sells most of its toys during the December holiday season, it places 80 percent of its production orders between June and September so that the products are shipped between July and the end of October. Ting Lee, Playhuts Vice-President of Operations, testified that Playhut would begin the process by sending UDE a purchase order containing specifications for a particular item. Lee conceded that UDE could accept, reject or request revision of any purchase order. In a similar vein, Xili Song, President of UDE, testified that UDE would accept or decline a purchase order depending on the orders terms, including price.

During the summer of 2005, UDE rejected several of Playhuts purchase orders because Playhut had failed to pay for earlier shipments of goods. One rejected order was order PE05024. Playhut tried to negotiate payment terms agreeable to UDE on that purchase order, but its efforts proved unsuccessful. As a result, Playhut cancelled order PE05024 and placed its order with another vendor. The parties were able to reach agreement on another purchase order (PE05028),[1]but then Playhut cancelled that order and contracted with another factory. Although Playhuts pleading had identified purchase order PE05018 as one of the contracts UDE had breached, documentary evidence produced at trial established the contrary. The goods were manufactured and shipped on October 15, 2005, as UDE had agreed to do.

During trial, Playhut introduced hundreds of pages of documents (purchase orders, emails, etc.). At the close of trial, the court asked the parties to submit trial briefs addressing specific issues. In particular, the court requested Playhut to clarify, in its trial brief, which specific exhibits are evidence of orders that [UDE] accepted and then did not produce in conformance with the contract terms.

Playhut subsequently submitted a posttrial brief raising for the first time the theory that it had a requirements contract with UDE which UDE had breached.[2] This theory had not been pled in the second amended complaint, set forth in Playhuts opening statement, or explicitly testified to by any witness.[3] Nonetheless, Playhut argued that it had proved a requirements contract . . . under which [UDE] agreed to provide those toys that Playhut required up to [UDEs] annually-determined capacity. Playhut claimed that it had established the contract through evidence of a course of dealing between the parties, the custom and practice in the Chinese manufacturing community of Xiamen, oral conversations between [UDEs] co-owner Steven Shen and various Playhut employees, with written confirmations of some terms through emails and purchase orders. Playhut urged that the evidence showed that in the summer of 2005, [UDE] started refusing orders unless it received additional payments, taking orders and refusing to produce the goods after acceptance, and refusing to commit to timely production.

The trial court ruled that Playhut had failed to meet its burden of proof. Its statement of decision explained that Playhut did not prove (1) a requirements contract; (2) [UDEs] agreement to produce all of [Playhuts] requirements or needs in 2005; or (3) bad faith breach of contract by [UDE]. [Playhut] did not prove [UDEs] failure to use best efforts to fulfill the purchase orders it agreed to fill.

B. Discussion

Playhut contends that the trial court erred in finding that Playhut failed to plead and prove the existence of a requirements contract. (Bold and capitalization omitted.) The contention lacks merit, legally and factually.[4]

Generally, a requirements contract is one under which the seller [here, UDE] agrees to sell and the buyer [here, Playhut] to buy all of the goods of a particular kind that the buyer may require in its business. (White & Summers, Uniform Commercial Code (5th ed. 1996), Terms of the Contract,  3-9, p. 234 (White & Summers).) Thus, for a requirements contract to be valid, it must (1) obligate the buyer to buy goods, (2) obligate the buyer to buy the goods exclusively from the seller, and (3) obligate the buyer to buy all goods of a particular kind from the seller. (Id. at p. 235.) This principle of contract law is codified in the California Uniform Commercial Code section 2306.[5]

Exclusivity is the touchstone of a requirements contract because by agreeing to buy all of its requirements from one seller, the buyer has parted with the right to buy the goods elsewhere. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts,  228, p. 263.) Without that promise, there is no valid contract because there is no consideration given by the buyer. White & Summers, explain, by way of example: [W]here a retailer of gasoline had an agreement to purchase its supply from a wholesaler, but was free to purchase from other suppliers, the absence of exclusivity could not be cured by [section] 2-306, and the agreement was found unenforceable for lack of mutuality. (White & Summers, supra, at p. 236.)

Here, it is clear that no requirements contract was ever explicitly formed. No evidence (documentary or testimonial) was presented to establish that Playhut agreed to purchase all of its requirements from UDE and that UDE agreed to provide those requirements. Further, substantial evidence supports the trial courts implied finding that Playhut did not establish the existence of a requirements contract through evidence of course of dealing and custom and practice. Lee, Playhuts Vice-President of Operations, testified that UDE was but one of four or five factories that produced toys for Playhut from 2002 through 2005. During that period, the percentage of Playhuts products manufactured by UDE varied from a low of 9 percent to a high of 23 percent. Playhut would submit purchase orders to the various manufacturers based upon factory capacity, price, and ability to complete the job by a specific date. Each manufacturer, including UDE, was free to accept or reject any purchase order in toto or, alternatively, to attempt to negotiate different terms. This arrangement demonstrates that Playhut never promised to have UDE fulfill all of its needs but, instead, that Playhut merely placed orders with UDE when it was advantageous to do so. In sum, the record more than amply supports the trial courts implied finding that the parties actions did not establish a contract whereby Playhut agreed to place all of its manufacturing orders with UDE.

To a certain extent, Playhut argues against this conclusion by claiming that sufficient exclusivity was established because it (Playhut) agreed to order at least one fourth of Playhuts needs several months in advance of the holiday season. We are not persuaded. As White & Summers explain: Despite the presence of another supplier [here, the other toy manufacturers used by Playhut in Xiamen], the contract may be sufficiently exclusive. This may occur where a purchaser [here, Playhut] agrees to purchase exclusively from a seller up to a certain quantity. (Id. at p. 236, italics added.) The record does not support application of that principle to this case. No evidence was produced that Playhut agreed to order 25 percent of its needs (or any other specific quantity, for that matter) from UDE in 2005 before Playhut placed any orders with other manufacturers. In fact, the record establishes the contrary: Playhut tendered purchase orders to all of its suppliers on an on-going basis depending on its needs at the moment and the manufacturers ability and willingness to meet those needs. The fact that the percentage of Playhuts production needs manufactured by UDE varied from year to year further supports the conclusion.

Thus, substantial evidence supports the trial courts finding that no contract was formed which UDE breached.[6]

II. UDES CROSS-COMPLAINT FOR BREACH OF CONTRACT

A. Factual and Procedural Background

UDEs cross-complaint against Playhut alleged causes of action for breach of contract, open book account, and account stated based upon the same operative facts. UDE alleged that there was an outstanding balance of $849,211.11 owed for goods it had manufactured for Playhut in 2004 and 2005.

Contentious discovery litigation followed because UDE failed to respond to Playhuts discovery.[7] In particular, UDE failed to produce requested documents and to make available for deposition the person most knowledgeable (Stephen Shen, who ran UDEs day-to-day operations) about the transactions. On April 9, 2007, the trial court, pursuant to the parties stipulation, ordered that the documents be produced by April 13 and Shen be deposed on April 16. When UDE failed to comply with the courts order, Playhut moved ex parte on April 25 to shorten time for hearing a motion for terminating sanctions on the cross-complaint.[8] (Trial was set for May 21.) The trial court denied the request, finding no good cause for an ex parte motion.

The matter of UDEs discovery failures was taken up on May 21 immediately before trial commenced. Playhut apparently had abandoned its request for terminating sanctions because it filed a brief seeking an Evidence Code section 402 hearing to determine the extent to which UDEs discovery violations would preclude UDE from proving the cross-complaints allegations.[9] Playhut called Song, UDEs President, as an adverse witness (Evid. Code,  412), to establish: (1) UDE had not produced the documents as ordered by the court; and (2) she (as opposed to Shen who had not appeared for deposition as ordered) was unqualified to testify to the facts underlying UDEs claim. After Song testified for a while, the court stated: May I suggest you just try your case, because youre going nowhere with this. Playhuts counsel agreed and excused Song as a witness at that point. Playhut then asked the trial court to bar Song from testifying on the cross-complaint because of the discovery violations. UDE opposed the request. The court declined to rule on the motion and, instead, directed the parties to present their respective cases and let the court decide the issue in the context of the trial after the parties had presented all their evidence.

Playhut proceeded on its case-in-chief. One of its witnesses was Chang, Playhuts Vice-President of Finance and Operations. (See fn. 3, ante.) Chang testified that she had conducted a reconciliation of Playhuts books with respect to all its suppliers, attempting to allocate charge-backs for defective products and returns. With respect to UDE, Chang testified that Playhuts books showed accounts payable to UDE in the sum of $780,000. But Chang also calculated that Playhut was entitled to credits in the sum of approximately $720,000 for merchandise returns. Thus, she calculated that the net amount Playhut owed UDE was $58,000.

Chang offered no documentary evidence to support her assertion that UDE owed Playhut $720,000 for charge-backs. She testified that Playhut had not paid the $58,000 owed to UDE because, among other things, Playhut was still waiting for UDE to supply documents to confirm Playhuts analysis. Chang herself had been hired by Playhut in July 2006 to revise Playhuts chain of supply and quality control. As of her hiring, Playhuts practice was to send photos of defective products to its office in China, and the China office would then forward the photo to the manufacturer. However, Chang was unable to testify concerning specific communications or documents that Playhut may have sent to UDE concerning defective products and charge-backs in the period 2003 through 2005, before she was hired. She believed that Playhut had sent many emails to UDE regarding defective products. Chang maintained that the damages caused to Playhut by UDEs breach of contract were a lot greater than $58,000.

Before UDE presented the case on its cross-complaint, it explained its theory as follows. Our case is pretty much a nonpayment case. In fact, the number that we are claiming is almost the exact number that Ms. Chang admitted to as owing. . . . [S]he says they [Playhut] owe about [$]778,000. Our figure is $783,000 is outstanding. So I dont think theres really any dispute about that. [] And the question then becomes, they [Playhut] say, were entitled to all those offsets. And, quite honestly, Your Honor, we havent seen one single piece of evidence eliciting any proof of any claim of any offset. As a result, I think our case is pretty easy to prove. Here is the invoices. This isnt whats paid. This is what is owed to us. And we shipped the goods, and you just didnt pay for whatever reason. And were going to ask for judgment in the amount of $783,000.

UDE called only one witness, Song, its President. After Song had testified over Playhuts objection to the amount owed by Playhut to UDE on two specific invoices, Playhut offered to stipulate that this witness will testify the same way to every single one of these invoices but renewed its claim that an insufficient foundation had been laid to permit Song to so testify. The trial court disagreed with Playhuts claim, noting that Playhuts witness Chang had testified that Playhut owed UDE $780,000. After counsel argued the point, Playhut stood by its offer to stipulate. Song then testified that Playhut owed UDE $783,719.03. Song claimed that UDE had never received from Playhut any photos or official claims report concerning defective goods. Song also testified that Playhut had never raised any issues with UDE about quality control or returned items, and had never communicated to UDE about charge-backs.

After the parties had rested on the cross-complaint, the trial court requested briefing on various issues. In particular, it asked UDE to identify the exhibits it believed supported the causes of action alleged in the cross-complaint and asked Playhut to identify what evidence it believed should be viewed with caution or discredited as a result of [UDEs] failure to produce Mr. Shen for deposition, and failure to produce documents pursuant to the stipulated order of the court. The court also asked both parties to address the issue of charge-backs for returned goods.

Playhuts brief urged, among other points, that UDEs discovery violations had impaired its ability to challenge UDEs claim about the amount Playhut owed on the unpaid invoices.

The portion of the trial courts statement of decision addressing the cross-complaint explained: [UDE] willfully refused to comply with this courts order to produce documents and [UDEs] most knowledgeable witness to testify about them. As a result, [Playhut] was at a substantial disadvantage in attempting to disprove the testimony of [Xili] Song that [Playhut] owes [UDE] $783,319.03 on the cross-complaint. Neither side proved by a preponderance of the evidence what is the proper amount that should be deducted from amounts due to [UDE] for chargebacks by [Playhuts] customers. However, [Playhut] does not dispute that it owes [UDE] $58,000.00 on the cross-complaint. The court finds [Playhut] breached its contract to pay [UDE] for goods received and that [Playhut] owed [UDE] $58,000.00. (Italics added.)

The court entered judgment in favor of UDE for $58,000 plus costs on the breach of contract cause of action in its cross-complaint.

B. Discussion

UDE contends that the evidence presented at trial, and as admitted by Playhut, was that Playhut had failed to make payments to UDE for goods that were shipped and received. As a result of this failure to make payment, UDE was entitled to recover its total contractual damages in the amount of $783,719.07. [] However, the Trial Courts award of $58,000.00 could only have been reached by applying the offsets [for charge-backs] as claimed by Playhut. The application of the offsets and the manner in which it was done was error and requires reversal and remand. (Fns. omitted.) In particular, UDE claims that the trial court improperly shift[ed] the burden to UDE to demonstrate the correct amount of the offset when it was not UDEs burden to disprov[e] Playhuts affirmative defense of offset. We reject UDEs contention[10]because it is based on an incorrect interpretation of the trial courts ruling.

UDE is correct that Song testified that Playhut owed it $783,719.07. In addition, UDE is correct that no documents were admitted to support Changs testimony that UDE owed Playhut $720,000 for the charge-backs. That, however, does not mean that UDE established its case. Drawing all inferences in favor of the trial courts decision (Espinoza v. Classic Pizza, Inc. (2003) 114 Cal.App.4th 968, 975 (Espinoza)), we construe the courts ruling as follows.

It is apparent from the trial courts decision that the court rejected Songs testimony as a sanction for UDEs willful discovery violations. After UDE failed to comply with the trial courts pretrial order to produce documents and to produce Shen for deposition, Playhut sought sanctions on the basis that UDEs failures impaired its ability to defend against the cross-complaint. When Playhut faltered in its attempt to prove this claim in the Evidence Code section 402 hearing conducted immediately before trial, it accepted the trial courts suggestion to commence trial and let the court address the issue after it had heard all of the evidence presented by both parties on their respective pleadings. Thereafter, documentary (invoices) and testimonial (Chang and Song) evidence was presented regarding issues raised by the cross-complaint. Playhuts trial brief reiterated its claim that UDEs discovery violations had impaired its ability to defend against the cross-complaint.

In its statement of decision, the court expressly found that UDE willfully violated the courts order to produce documents and produce a person most knowledgeable. It further expressly found that UDEs discovery violations put Playhut at a substantial disadvantage in attempting to disprove Songs testimony that Playhut owed UDE $783,319.03. In its opening brief, UDE does not mention (let alone challenge) the trial courts finding that Playhut was prejudiced by UDEs discovery violations. (See Reyes v. Kosha (1998) 65 Cal.App.4th 451, 466, fn. 6 [Issues not raised in an appellants brief are deemed waived or abandoned. (Citation.)].)

In any event, the trial record reasonably supports the trial courts finding of prejudice to Playhut. Because Chang was not hired by Playhut until July 2006, she was unable to testify concerning the specifics of Playhuts communications with UDE regarding defective products in 2003 through 2005. She believed, however, that there had been many emails from Playhut to UDE concerning defective products. Moreover, as of the date of her hiring in July 2006, Playhuts practice was to send photos of defective products to its office in China, and the China office would then communicate with the responsible factory. This practice, in place when Chang was hired, suggested that UDE might well have received photos of defective products from Playhuts China office in the period 2003 through 2005. Chang also testified that Playhut had not yet paid the $58,000 balance it concededly owed UDE because, in part, it was waiting for documents from UDE to confirm Playhuts analysis of the amount of the charge-backs.

On behalf of UDE, Song claimed that UDE had never received from Playhut any photos or official claims reports concerning defective goods and that Playhut had never communicated to UDE about charge-backs. Because UDE had violated the courts pretrial discovery orders, however, Playhut was unable to learn precisely what evidence UDE possessed relevant to the claimed charge-backs, and hence was unable to effectively cross-examine Song and to effectively corroborate Changs testimony.

Thus, the trial court could reasonably conclude that UDEs willful discovery violations prejudiced Playhuts ability to challenge Songs testimony concerning the amount owed by Playhut. Further, in awarding UDE only $58,000 the amount Playhut conceded it owed[11]-- rather than the amount claimed by Song, the court necessarily rejected Songs testimony as a sanction for UDEs willful discovery violations. (See, e.g., Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1327 [when a party willfully fails to comply with court-ordered discovery, the trial court has broad discretion to impose sanctions that are suitable and necessary to protect the interests of the party denied discovery].)

The courts comment in its statement of decision that [n]either side proved by a preponderance of the evidence . . . the proper amount that should be deducted . . . for chargebacks did not mean that the court improperly shifted the burden of proof to UDE to disprove Playhuts defense of an offset. The court clearly understood that Playhut bore the burden of proof on that issue. The court expressly stated that Playhut had been put at a disadvantage in attempting to disprove UDEs claim that Playhut owed $783,319.03. Playhuts attempt to disprove UDEs claim relied on Playhuts evidence of charge-backs. Therefore, the courts statement of decision reflects a proper understanding of the burden of proof on Playhuts defense.

As against UDE, the courts comment that neither side had proved the proper amount due for charge-backs meant that UDE had not prove the amount it was owed because as a discovery sanction the court disregarded Songs testimony disputing the charge-backs. As against Playhut, the courts comment meant that Playhut had not proved the amount of the charge-backs because UDEs discovery violations had substantially disadvantaged Playhuts attempt to disprove the amount claimed by Song. Despite its evidentiary disadvantage, however, Playhut conceded that it owed UDE $58,000. The court therefore awarded UDE that sum.

UDE argues at length that Changs testimony does not constitute substantial evidence to prove that Playhut was entitled to credits of $720,000 for charge-backs and that Playhut owed UDE only $58,000. UDEs arguments, however, miss the point. The trial court concluded, in substance, that UDEs discovery violations created the deficiencies in Playhuts evidence of charge-backs that is, that UDEs discovery violations placed Playhut at a substantial disadvantage in attempting to disprove [Songs] testimony that [Playhut] owes . . . $783,319.03. Having rejected Songs testimony in its entirety as a discovery sanction, the only evidence remaining on the amount owed by Playhut was Changs concession that Playhut owed $58,000. That is the amount the court determined was owed.[12] Drawing all inferences in favor of the courts ruling (Espinoza, supra, 114 Cal.App.4th at p. 975), we will not disturb this common sense resolution of the case.

DISPOSITION

The judgment entered on the complaint and cross-complaint is affirmed. The parties to bear their own costs in this proceeding.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

WILLHITE, J.

We concur:

EPSTEIN, P. J. MANELLA, J.

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[1] Playhuts pleading had identified purchase order PE05028 as one of the contracts UDE had breached.

[2] Because the parties concurrently submitted trial briefs, UDEs brief did not address Playhuts claim of a requirements contract. UDEs briefs on appeal do respond to that point.

[3] One of Playhuts principals clearly saw UDEs breach of contract as only involving a few agreements. Jackie Chang, Playhuts Vice-President of Finance and Operation, testified about the financial effects of those two or three p.o.s [purchase orders] that UD[E] did not produce in 2005 and the two or three p.o.s that UD[E] failed to produce to us.

[4] Playhut urges that the trial courts findings are reviewed de novo. Not so. Playhuts contention attacks the trial courts resolution of a disputed factual issue: did Playhut and UDE enter into a requirements contract which UDE subsequently breached? We therefore review the trial courts finding under the deferential substantial evidence standard of review. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 462 [The substantial evidence standard applies to both express and implied findings of fact made by the superior court in its statement of decision rendered after a nonjury trial].)

[5] Section 2306 provides: (1) A term which measures the quantity by the output of the seller or the requirements of the buyer means such actual output or requirements as may occur in good faith, except that no quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded. [] (2) A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale. (Cal. U. Com. Code,  2306.)

[6] This conclusion renders it unnecessary to consider Playhuts further contention that the trial courts finding about damages is not supported by the record. On that point, the trial court found that Playhut did not prove that its damages, claimed to be $3,616,775.00, or any specifically identified part of those claimed damages, were reasonably foreseeable to [UDE].

[7] Apparently, UDE never propounded discovery to Playhut.

[8] The record does not contain a copy of a motion for terminating sanctions (assuming one was ever filed).

[9] Playhut submitted a brief on the issue but it is not included in the record on appeal.

[10] UDE made the same argument in its unsuccessful motion for a new trial.

[11] Chang gave this figure at four different points in her testimony. In addition, Playhuts trial brief conceded that it owed UDE $58,000.

[12] Playhut does not seek reversal of the $58,000 judgment in favor of UDE. Playhut concedes that its arguments that the trial court abused its discretion (1) in denying Playhuts ex parte motion to shorten time to bring its motion for terminating sanctions and (2) in denying its pretrial motion to bar Song from testifying about the UDE invoices are moot if we reject UDEs claim of error and affirm the $58,000 judgment entered on the cross-complaint.

However, Playhuts briefs also seem to suggest that we should review the trial courts denial of its ex parte request to set a hearing on its motion for terminating sanctions because that ruling negatively impacted Playhuts ability to present evidence on its claim for breach of contract. This argument need not detain us for several reasons. For one, it has not been raised in a proper manner. Playhuts opening brief gave it only a passing mention in a footnote. Although Playhuts respondents brief has a longer discussion of the point, it cites no authority and develops no fact-specific argument. This deficient presentation constitutes a forfeiture of the claim. (Berger v. California Ins. Guarantee Assn. (2005) 128 Cal.App.4th 989, 1007.) But regardless, the claim has not been preserved because it was never raised in the trial court. Playhuts argument about UDEs discovery violations was directed only to Playhuts ability to defend against the cross-complaint; Playhut never complained that UDEs failure to comply with the courts order impaired its ability to present its case-in-chief on its breach of contract claim. For instance, at the final status conference held 10 days before trial commenced, Playhut stated that it intended to ask the trial court to strike [UDEs] cross-complaint for not having a witness. And Playhut explained immediately before trial after it had abandoned the Evidence Code section 402 hearing: [W]hat weve been talking about with Ms. Song has to do with the cross-complaint and not with [Playhuts] complaint. So what she has said is really not pertinent to the proving of our case. Playhut therefore is precluded from raising on appeal for the first time a theory it could have but did not raise below. (See, e.g., Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 847.)