TAT Capital Partners v.
Feldman
Filed 7/2/12 TAT Capital Partners v. Feldman CA6
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
SIXTH APPELLATE DISTRICT
TAT CAPITAL
PARTNERS LTD., et. al.,
Plaintiffs and Respondents,
v.
DAVID FELDMAN,
et. al.,
Defendants and Appellants.
H035968
(Santa Clara County
Super. Ct. No.
CV035531)
In
this appeal we address several procedural issues raised by defendants ZF Micro
Solutions (Solutions); its principal, David Feldman; and a number of individual
investors in Solutions. Appellants
contend that the trial court deprived Solutions of a jury trial on every
element of breach of contract in consolidated
actions brought by plaintiffs TAT Capital Partners, Ltd. (TAT), Sands
Brothers Venture Capital LLC, and SB New Paradigm Associates LLC. Appellants further argue that the court
failed to find that TAT lacked standing to prosecute the action, essentially
directed a verdict on the jury portion of the trial, and impermissibly severed
Solutions' cross-complaint against TAT.
As to the individual defendants, appellants contend that the court
violated Civil Code section 3439.08, subdivision (b), by imposing more than $9
million in damages on them for being "fraudulent
transferees" even though the amounts claimed by plaintiffs totaled
only $6.7 million. Finally, appellants
assert a deprivation of Feldman's due process rights arising from the court's
exclusion of him from the courtroom and subsequently from the areas through
which the jurors would pass. We find no
error, however, and therefore must affirm the judgment.
Background
The Parties
Appellant
Solutions is the successor company to ZF Micro Devices (Devices), which had
contracted with National Semiconductor Corporation (NSC) to produce the
embedded "ZFx86" microchip.
Appellant David Feldman, the founder and chief executive officer (CEO)
of Devices, also started Solutions and was its president and CEO.
Plaintiff TAT represents itself as a venture capital
firm formerly known as TAT Investment Advisory Ltd., a private equity firm
investing in startup technology companies.
It was a Swiss company with an American manager, Mark Putney, who
resided in California.
name="_ftnref2" title="">[2] Sands Brothers Venture
Capital LLC (Sands Venture) and SB New Paradigm Associates LLC (collectively,
"Sands") were also venture capital firms based in New York. TAT held 21.7 percent of the shares in
Devices; the Sands entities together owned 10.4 percent.
On
February 28, 2002, as a consequence of Devices' default on a loan by Gary
Kennedy, a Devices investor, Kennedy foreclosed and Devices ceased its
operations. Kennedy sold the Devices
assets he had acquired to Solutions, which Feldman had started a month
earlier. Feldman and his sister, Marsha
Armstrong, loaned nearly $400,000 to Solutions for the purchase of the Devices
assets. Included in this assignment of
assets was the chip production agreement between Devices and NSC.
The NSC Litigation
On April 25, 2002 Solutions sued NSC on
several grounds, including NSC's failure to produce chips for Solutions in
accordance with the contract NSC had with Devices. On May 28, 2002, NSC filed a cross-complaint
against both Devices and Solutions (as successor) for failure to pay for chips
it had produced and sent to Devices in accordance with the same contract. NSC filed a first amended cross-complaint one
year later, on April 25, 2003, asserting new causes of action against the
cross-defendants, including breach of fiduciary duty and fraudulent transfer of
assets from Devices to Solutions.
On
March 11, 2004 Feldman sent a letter to the shareholders of Devices, noting
that he had bought "certain of the assets" of Devices and
"recast the company" as Solutions.
Among the purchased assets, he noted, was the right to pursue the action
against NSC. In order for the new
company to continue, however, it needed an additional $500,000 beyond the $1
million it had secured through cash investment and product sales. Toward this end Feldman asked the
shareholders to consider investing an amount equal to $.02 per share of their
original investment in Devices. As an
incentive, he offered a "Series of Preferred Stock with a redemption for
10 times the amount of your investment in New ZF [i.e. Solutions]. Funds for both the payment of this
liquidation preference and for the continuation of ZF are expected to come from
the results of the litigation with [NSC]."
Feldman added that he expected the litigation to culminate eventually in
damages that would "greatly exceed the the [sic] net amount after litigation costs needed to meet the
liquidation preference." At trial
Feldman explained that "litigation preference" meant "the 10x
return," and "litigation costs" meant "everything that it
was going to take to keep the company alive.
To pay for expert witnesses. To
pay the litigation funding companies. To
pay the 10x return, etc."
A
number of Devices shareholders responded to this invitation and signed the
"ZF Micro Solutions, Inc. Series B Stock Purchase Agreement." TAT and Sands, however, did not. Many of those who did sign were later named
in plaintiffs' lawsuit and have been referred to variously as the Series B
investors, transferee defendants, and individually named defendants.
One
of the issues that arose in the NSC litigation was whether Solutions had
standing to assert tort claims against NSC.
NSC maintained that those claims belonged exclusively to the
shareholders of Devices. In response,
Feldman produced a separate document purporting to transfer all intellectual
property related to the ZFx86 chip from Devices to Solutions, including
"any claims" against NSC arising from the production agreement. This "Assignment of Assets" bore no
date of signature but denoted March 1, 2002 as its effective date.
NSC,
however, disputed the effectiveness of this document. On April 10, 2004 Feldman wrote to the
Devices shareholders, asking them to ratify his transfer of Devices' legal
rights against NSC to Solutions. The
attached document, titled "Action by Unanimous Written Consent in Lieu of
Meeting of Board of Directors of ZF Micro Devices, Inc., A California
Corporation," prefaced its resolution by representing that the
shareholders wanted Solutions to pursue the claims against NSC and that they
wished "to eliminate any questions surrounding the corporate formalities
surrounding the transfer of the Causes of Action from this corporation to
Solutions." As the court later
pointed out, however, neither this "Consent Agreement" nor the April
10 letter referred to the Series B investors' prospective recovery of a portion
of the anticipated recovery from NSC. At
most the Consent Agreement offered an acknowledgment that "the directors
[of Devices] understand [that] Solutions made agreements with each of the
shareholders and creditors, excluding National Semiconductor Corporation, for
payment of a portion of the proceeds of any judgment resulting from the Causes
of Action [against NSC]."
Howard
Sterling, the chief operating officer of Sands Venture, signed the Consent
Agreement and returned it on April 14, 2004.
Sterling testified at trial that he signed the agreement after receiving
oral assurances from Feldman that Solutions was expected to recover "a lot
of money. And after costs and expenses,
which [Sterling] understood as basically the lawyers and litigation-related
expenses were paid, the shareholders would be paid pro rata." Sterling "especially understood that the
quid pro quo for giving our consent was validating that fair, just, and
historical the way it was agreement [sic]."
Putney
received his copy of both the Consent Agreement and the April 10 letter by
e-mail from Feldman on April 11, 2004.
On Tuesday, April 13, 2004, he forwarded the e-mail and attachments to
his TAT co-worker and fellow manager, Thomas Egolf, who replied the same day. Egolf suggested to Putney that they ask for a
"clear specification of the distribution of the proceeds. It now reads that Solutions made [an]
agreement with the undersigned shareholders, but we have not seen anything like
this. If this issue is not clear we will
certainly not sign this."
Putney
then informed Feldman that TAT would not sign "until a clear understanding
is given with regards [sic] to
distribution of proceeds in the event of an award." Feldman replied on April 17 with the
following clarification: "TAT will
be treated the same as all ZF Micro Devices shareholders. The distribution plan in the event of an
award or settlement is as follows: Legal
expenses and associated costs must be paid first. Then there will be pro-rata distribution of
the remainder to the creditors, followed by the return promised to those
investors in ZF Micro Solutions who invested after the March 11, 2004 letter,
followed by a pro-rata distribution to all shareholders of record in ZF Micro
Devices as of the February 28, 2004 [sic]
foreclosure by the Kennedy Trust."
On
Friday, April 23, 2004, Feldman sent another e-mail to Putney in response to
"your voicemail." He asked
Putney for "an example . . . of exactly what TAT is looking for in
writing." He emphasized the urgency
of a resolution, as a hearing on an issue related to NSC's standing challenge—a
"Motion to Separately Try Issue re Proper Plaintiff"-- was to take
place the following Tuesday, and it was "important to show the judge that
there is agreement by all."
Egolf
was on vacation, but Putney responded that day by suggesting that Feldman
provide "a detail [sic] in
writing of distribution taking into account all that has evolved with the
transfer of assets, creditors (amount owed), where new money sits and
ultimately where TAT would be (percentage of equity) in the event of
distribution. That, with a
cap[italization] table would be a good start." Feldman replied two hours later: "I asked Trepel Law to prepare a letter
which I have signed and attached that reiterates what I told you on the
phone. Additionally, I am attaching the
Declaration I submitted to the court which also confirms the intention to do the pro-rata distribution after expenses and
litigation costs." (Italics
added.) Feldman suggested a meeting to
go over all of the information Putney was requesting and provide anything else
TAT needed.
title="">[3]
The
letter to which Feldman referred was written by Feldman, not the Trepel law
firm, but Anthony Trepel, Solutions' attorney, did review it before it was sent
to Putney. Signed by Feldman, the letter
stated: "It is my intention to
treat TAT Capital Partners the same as all other shareholders of ZF Micro
Devices ('ZFMD'), should ZFMD or ZF Micro Solutions ('ZFMS') prevail in the
litigation against NSC. Specifically, I
intend to share, pro-rata, the recovery (after deduction of attorneys fees and
litigation costs) first with ZFMD's
creditors and then with ZFMD's shareholders. I enclose a copy of a declaration, previously
submitted to the Court, which states this." (Italics added.) Putney understood this letter to mean,
contrary to the version in the April 17 e-mail, that now the Solutions
shareholders were to be paid after
the Devices shareholders. That
difference was important to Putney because TAT, while it had $9.8 million
invested in Devices, owned no shares in Solutions, "so we weren't going to
give a ratification for nothing."
Thus, considering TAT's duty to its own investors, Putney wanted to make
"very well sure" that Devices would be paid first.
The
declaration referred to in Feldman's April 23 e-mail and letter had been
submitted to the court in the NSC litigation on April 20. In that declaration Feldman stated: "It is my intention to pay ZFMD
creditors and shareholders a pro-rata portion of any recovery from NSC from
available funds (after deduction of certain costs and expenses) after trial or
settlement." Feldman represented to
the court that he had already obtained approval of the disputed assignment from
85-87 percent of Devices shareholders, and he attached the signature pages from
three consenting shareholders. He
further stated that he had been "promised" approval from additional
shareholders, which would bring the total to 90 percent in time for the April
27 hearing on NSC's motion for a separate trial on the "proper
plaintiff." NSC disputed the
approval percentages asserted by Feldman by pointing out that Putney had not
agreed to the proposal and that the three shareholders whose consent had been
obtained (to an unspecified document) accounted for only 28.6 percent, not
85-87 percent.
name="_ftnref4" title="">[4]
On
Monday, April 26, 2004 (the day before the NSC hearing) Putney authorized
Maarten Robberts to sign the "Action by Shareholders" ratifying the
assignment of the NSC litigation from Devices to Solutions. Robberts faxed the signed consent the next
day. At the April 27 hearing on NSC's
motion Solutions represented to the court that more than 90 percent of the
Devices shareholders had consented to the assignment of the claim against NSC. Feldman testified to the same fact during his
deposition in the present action.
On
June 15, 2004 Feldman sent e-mail to the Devices shareholders to announce that
the jury had reached a favorable verdict in the NSC litigation the previous
day. Feldman warned the investors, however, that the award was less than $29
million, and "legal expenses, creditors and other costs" could exceed
50 percent of the total. Putney
responded to the e-mail, "Dave, does this mean that TAT will share prorata
$15M?" Feldman did not respond
directly to the assumption behind Putney's message, but only told Putney that
NSC intended to appeal so "they could be looking at another two
years." In a June 25 meeting
between him and Putney, however, Feldman outlined the next steps in the NSC
proceedings and sketched out TAT's expected recovery of $2.9 million.
On
August 24, 2004, Feldman notified the shareholders that the court had ordered a
new trial upon NSC's motion.
On
September 27, 2004, Feldman solicited additional investment from Devices and
Solutions shareholders to fund the new trial.
He requested $.04 times the number of shares held in Devices, with a
promise of "Series C Preferred Stock" with a redemption right of four
times the amount of the shareholder's investment in Solutions. After costs and legal fees were paid, the
proceeds would be distributed to Series B and Series C investors, followed by
"a pro-rata distribution of the balance to the shareholders and
creditors." Feldman elaborated on
this sequence in an October 2004 letter, which added the details of the
anticipated litigation costs and explained that Series B investors would be
paid before Series C investors, and any remaining funds would be used to repay
Devices investors and creditors. In
November, however, Feldman advised shareholders of both companies that instead
of implementing the Series C plan, Devices would extend the Series B offer,
thereby promising the same "10x return" as the existing Series B
investors. Feldman renewed this
invitation on December 14, 2004. Putney,
however, conveyed to Feldman the lack of interest in investing from TAT and its
shareholders. Sands likewise did not
avail itself of this opportunity.
On
December 31, 2004, Feldman informed the shareholders that a settlement had been
reached with NSC, but the amount Solutions would receive was "far less
than we had hoped for and will not yield enough net of all legal fees,
litigation costs, and ZF Micro Solutions Series B repayment commitments to
provide any return on the investments made in ZF Micro Devices."
Putney
asked for a detailed accounting of the distributions planned for the $20
million settlement. Feldman did not
respond to this request. TAT's attorney
repeated the request in January 2005, but Feldman was not "able" to
provide the accounting until this lawsuit was brought.
The Pleadings in This Action
On
February 14, 2005, TAT and Sands jointly sued Feldman, Devices, and Solutions,
seeking dissolution of Devices and an accounting, as well as compensatory and
punitive damages for breach of fiduciary duty and fraudulent transfer. The operative complaints at trial, however,
were respondents' separate pleadings:
TAT's second amended complaint and Sands' fourth amended complaint. TAT pleaded breach of contract against
Solutions and three causes of action against the individual defendants for
fraudulent transfer. Sands alleged
breach of contract, breach of contract as a third party beneficiary of the
TAT-Solutions agreement, and promissory estoppel against Solutions, as well as
the same three causes of action for fraudulent transfer against the individual
defendants.
In
its contract cause of action, TAT alleged that it had signed the Consent
Agreement in reliance on, and in consideration for, promises Feldman had made
in the April 17 e-mail and the April 23 e-mail and letter. Sands, on the other hand, asserted that
before Sterling signed the April 2004 Consent Agreement, Feldman
ratified the assignment from Devices to Solutions, Sands "would be treated
the same as all other shareholders of Devices and that any recovery [from NSC],
after deduction of attorneys' fees and litigation costs, would be shared
pro-rata, first with the creditors of Devices and then with the Devices
shareholders." Sterling signed the
Consent Agreement in reliance on that promise, thus creating a contract and the
basis of promissory estoppel. Sands
further alleged that it was the third-party beneficiary of the pro-rata
agreement between Solutions and TAT, because Sands was "a member of the
class intended to benefit from the TAT Pro Rata Agreement." Both plaintiffs accused the individual
defendants of fraudulent transfer within the meaning of Civil Code
section 3439.04, subdivisions (a)(1) and (a)(2)(A), and section 3439.05.
Devices
and Solutions were permitted to file a cross-complaint against TAT. Their first amended cross-complaint, deemed
the operative complaint in October 2009,
duty in the course of Putney's and Egolf's service on the Devices board of directors.
The
parties engaged in extensive pre-trial litigation over the action and
cross-action, including injunction requests, motions to strike, demurrers, a
plea in abatement, and summary adjudication motions. Among those procedural digressions was a motion,
which the court granted, to sever the first amended cross-complaint and
consolidate it with a separate pending action.
Finally, trial before the Honorable Carrie Zepeda began on January 5,
2010, just short of five years after the initial complaint was filed.
The Trial
Among
the numerous motions in limine was
defendant's request that the trial be divided into three phases: a bench trial
to determine plaintiffs' standing to bring the lawsuit; a bench trial to
determine "whether the terms of the alleged contract at issue are
sufficiently definite to create an enforceable contract"; and a jury trial
on "Plaintiffs' promissory estoppel and fraudulent transfer claims and
Defendants' cross-claim for breach of fiduciary duty." The court granted defendants' motion in
part. The requested first phase was
moot, because the court had already granted TAT's motion in limine to preclude
evidence on this issue. Defendants'
requested second phase, however, was accepted by the court, over TAT's
objection: The court announced that it
would determine whether the "pro rata agreement" was "a valid
contract" or vague and therefore unenforceable. The court rejected TAT's argument that the
issue had already been determined by the ruling on a prior demurrer, because
that ruling merely pertained to the sufficiency of the pleadings; there could
still be evidence relevant to the vagueness issue.
conducted solely on the allegations of fraudulent transfer; the additional
request to include the cross-complaint in phase three was denied, because the
court had already severed this pleading and consolidated it with the separate
action.
The
trial on phase one took place over several days between early January and late
February of 2010. At the conclusion of
this part, the court found that a contract did exist between Solutions and TAT
and between Solutions and Sands, and that those contracts were sufficiently
definite to be enforced. In its
tentative decision the court initially noted that it had been "asked to
determine whether a contract was formed between the parties." The court then stated that "as there was
no material conflict in the extrinsic evidence related to the contract, the
court will also set forth the terms of the agreement between the
parties." Specifically, Solutions
agreed to "pay [TAT], in exchange for the execution of the Consent
Agreement, 21.7% of any recovery either by settlement or judgment of the NSC
Lawsuit after deduction of attorneys' fees paid by Solutions to its attorneys
in the NSC Lawsuit and litigation costs in the NSC Lawsuit."
finding as to Sands except that the percentage promised to Sands was 10.7
percent.
title="">[11] Before the jury began
hearing the case, the parties corrected this figure and stipulated that TAT was
said to control 21.7 percent of Devices; the two Sands entities together owned
10.4 percent.
On
April 14, 2010, the court gave the jury its initial instructions for phases two
and three. The court advised the jurors
that it had already tried a portion of the case and found that a contract
existed between plaintiffs and Solutions:
"The contract between the parties provided that in exchange for
signing a consent agreement TAT Capital Partners, Sands Brothers Venture
Capital, and SB New Paradigm Associates would receive a pro rata share of any
recovery from the National Semiconductor litigation, after deduction of
attorneys' fees and litigation costs and payment to ZF Micro Devices'
creditors." The court also told the
jurors that any Devices creditor no longer had any claim for payment because
the statute of limitations had expired.
The jurors' duty, the court explained, was "to determine whether
[Solutions] breached its contract with the plaintiffs. You will also determine whether [Solutions]
wrongfully transferred money to the individual defendants. [¶]
Finally, you will determine what, if any, damages plaintiff[s] should receive."
On
April 20, 2010, the jury found in favor of Sands and TAT on the allegations of
breach of contract. On the special
verdict form it found that Solutions had failed to perform as required by each
contract, and that both Sands and TAT were harmed. Sands was awarded $1,422,469.70, and TAT was
awarded $2,968,036.83.
On
May 12, 2010, after hearing further testimony, the jury rendered its special
verdict on the fraudulent transfer allegations.
On the issue of "constructive fraudulent transfer," it found
that Solutions had not received from each of the named transferee defendants
"a reasonably equivalent value in exchange for the transfer," and
that Solutions "was insolvent or
became insolvent as a result of [this transfer]," The transfer to each of these 22 defendants
was made by Solutions "with the intent to hinder, delay or defraud
plaintiffs," and it caused harm to plaintiffs. Addressing the single affirmative defense
presented to it, the jury found that each transferee defendant had not accepted
the transfer "in good faith and for reasonably equivalent
value." The court entered judgment
on June 10, 2010, and an amended judgment on August 23, 2010. After unsuccessfully seeking judgment
notwithstanding the verdict, vacation or modification of the judgment, and a
new trial, Solutions and 20 of the transferee defendants brought this appeal.
Discussion
1. TAT’s Standing
Before trial the defendants
repeatedly raised the issue of TAT's and Sands' standing to prosecute this
action. Defendants sought to defeat the
action on this ground by motion for summary judgment, by letter to the judge
handling pretrial matters, by motion for an order rescinding any "alleged
contracts" with plaintiffs, by plea in abatement, and by motion in limine
to exclude evidence based on the voidness of any contract. As to TAT, defendants took the position that
as a Swiss corporation, it was not permitted to file a lawsuit because it was
transacting business in California without registering with the Secretary of
State or paying state taxes. The failure
to register, defendants argued, in itself "voids the 'contract' and
requires abatement of the suit."
Defendants conceded that Sands had registered, but any contract with
Solutions was still voidable until Sands could show that it had paid taxes.
In addressing the plea in abatement
in January 2008, the Honorable Jack Komar ruled that the motion was
procedurally improper. The judge further
observed, however, that if he were to
rule on the merits of the issue, he "would conclude that neither of these
plaintiff entities have violated any principle of registration. They are registered. They are not acting in any capacity other
than as a shareholder since . . . long before the complaint was
filed in this case. At one time there
was an issue concerning whether or not they were acting outside their capacity
as a shareholder by virtue of being a director.
But there is certainly no evidence that that has happened since,
apparently, 2001 which is long before this action was filed." Judge Komar commented that this issue was
"basically a waste of . . . time and money" for
defense counsel and their clients.
During motions in limine, Judge
Zepeda denied defendants' second motion in limine to exclude evidence of breach
of contract, which defendants had brought on the same ground: the contracts
were void because TAT and Sands had transacted business without registering
with the state. She granted TAT's
seventh motion in limine to exclude evidence related to whether TAT was
licensed to transact intrastate business.
Judge Zepeda reasoned that Judge Komar had "already decided the
issue" with prejudice; but even if the question was, as defendants argued,
"still ripe," she agreed with Judge Komar's view of the merits.
On appeal, defendants renew their
challenge to TAT's standing to bring this action. They do not pursue their opposition to Sands'
right to proceed;
name="_ftnref12" title="">[12] consequently, our focus is on TAT
only.
Corporations Code section 2105
prohibits foreign corporations from transacting business in California without
having first obtained a "certificate of qualification." (§ 2105,
subd. (a).) A corporation that has
failed to comply with that provision subjects the corporation to monetary
penalties, and it may not "maintain any action or proceeding upon any intrastate
business so transacted in any court of this state, commenced prior to
compliance with Section 2105, until it has complied with the provisions
thereof." It also must pay an
additional penalty along with fees and taxes for the period in which it was
transacting intrastate business. (Corp.
Code, § 2203, subds. (a), (c).)
"Transacting intrastate
business" is defined in Corporations Code section 191, subdivision (a), as
"entering into repeated and successive transactions of its business in
this state, other than interstate or foreign commerce." Appellants maintain that TAT was transacting
business because its officer, Mark Putney, maintained an office at his home in
California, received a salary out of TAT's management fee, and actively served
on the board of directors for Devices until 2001.
These
facts are insufficient to bar TAT from the litigation. Subdivisions (b) and (c) of Corporations Code
section 191 exclude from the definition of "transacting intrastate
business" a foreign corporation's status as a shareholder of a domestic
corporation, its act of maintaining a lawsuit, and "[h]olding meetings of
its board or shareholders or carrying on other activities concerning its
internal affairs." (Corp. Code,
§ 191, subds. (b)(1), (c)(1), (c)(2).)
Neither Putney's activities related to TAT's internal affairs nor his
use of his residence to carry out those activities was sufficient to constitute
transacting business by TAT within California.
2. The Court's
Verdict on the Enforceability of the Contracts
Appellants'
primary argument is directed at the court's findings in phase one of the trial,
in which it determined that a contract existed between Solutions and TAT and
between Solutions and Sands, and that those contracts were sufficiently
definite to be enforced. Appellants
specifically contend that the trial court denied Solutions its constitutional
right to a jury trial on plaintiffs' cause of action for breach of contract,
the only claim for damages against the entity.
(Cal. Const. art I, § 16.) The only ways to waive that right, appellants
argue, are the acts described in Code of Civil Procedure section 631,
subdivision (d), none of which occurred in this case.
parties agreed to a court determination of "a single affirmative defense—
whether the terms of the purported agreement were too vague/uncertain to be
enforced." Instead, the court
surprised defendants when it took away Solutions' right to a jury trial and
"proceeded to decide, literally, everything she could think of related to
the 'breach of contract' claim except . . . performance of the arithmetic to
arrive at each plaintiff's dollar value recovery."
A fair reading of the record,
however, defeats this argument.
Defendants' motion in limine No. 1, to phase the trial, indicated that
the second phase (if plaintiffs were determined to have standing to proceed)
would "be reserved for the
adjudication of Plaintiffs' contract claims. In this phase, the Court would be asked to
determine whether the terms of the alleged contract are sufficiently definite
and clear to create an enforceable, binding contract. Because this is a question of law for the
Court, a bench trial is appropriate. . . . [I]f no
contract is found to exist, Defendants cannot be liable for fraudulent
transfer since it cannot be otherwise disputed that they were rightfully
entitled to the funds. . . .
The parties could then proceed with a jury trial on Defendants'
cross-complaint, which includes a single cause of action for breach of
fiduciary duty. Alternatively, if the
contract issues are not disposed of in the bench trial, TAT's breach of
contract claim and Sands' promissory estoppel claims could be tried along with
the cross-claim for breach of fiduciary duty.
[¶] Phasing the trial in this
manner will yield great efficiency by potentially sparing the jury, the Court,
and the parties needless weeks of testimony.
If it is determined in the early phases that Plaintiffs cannot maintain
this action or that no contract was
formed, then testimony, time and resources will be spared for all involved.
Streamlining the issues for the jury in this manner will ultimately alleviate
the risk of prejudice to all parties stemming from confusion." (Italics added.)
At
the in limine hearing defense counsel argued that the evidence would show
"that there was an entirely different understanding. And parol evidence as to the meaning of the
terms of that contract is going to be huge in this case. As referenced in our papers Mr. Issa, who is
one of the experts for TAT, even commented that he thought that Mr. Putney and
Mr. Feldman had two different understandings.
[¶] So we believe that there
. . . is an abundance of evidence that we intend to put on to
show the terms [are] vague and ambiguous as to what the parties' intent
was. . . . If you phase
that issue on the contract it is at the end of that phase of the trial the
Court will have determined whether or not there is a valid, enforceable
contract between the parties, and what
the terms are. And if we add on the
percentage issue, what the percentage being claimed, whatever pot of money
there might be." (Italics added.)
During
further argument in which the parties disputed the effect of Judge Komar's
demurrer ruling, defense counsel maintained that by overruling the demurrer the
judge merely found that plaintiffs' assertion of a contract was sufficient for
existed . . . and will offer at trial that it was a gratuitous
promise on the part of Mr. Feldman, which then parlays into the lack of
consideration issue, as well as the meaning of the terms and what his intent
and state of mind was. And what Mr.
Putney's intent and state of mind was, and how all the parol evidence
interplays with that. [¶] Again, if this is phased, then it's no harm,
no foul because it's before the Court,
not the jury. It's part of the issue that pertains to whether or not there is a
valid, enforceable contract that has not been adjudicated in our
view." In insisting that the
demurrer ruling contained "no determination" that the parties had
actually reached a contract, defense counsel further stated that whether there
was a contract was "an issue of law."
The court agreed with defense counsel and adhered to its tentative
decision to hold a court trial on the question of whether each alleged agreement
constituted "an enforceable contract on vagueness [sic]."
When
defendants received the court's tentative decision on phase one, they requested
a statement of decision. In that request
they acknowledged that "the parties agreed and the Court ruled that Phase
1 of the trial would be before the Court without a jury, and it would be
limited to (1) a determination of
contract formation . . . . [¶]
The Court stated that the contract formation issue would be
enforceable contract, i.e. one that was
sufficiently certain and not too vague or ambiguous to be enforced." (Italics added.) Defendants nonetheless protested that
"the terms and interpretation of the terms were left for a jury to
determine if the case reached Phase II."
They complained that they had not waived the right to jury trial
"regarding the actual contract terms and interpretation." Yet the issues defendants wanted the court to
address in its statement of decision included (1) whether plaintiffs
communicated their willingness to enter into a contract, (2) whether that
communication contained specific terms, (3) whether Solutions "could have
reasonably concluded that a contract with these terms would result if
[plaintiffs] accepted the offer," (4) whether plaintiffs proved that they
agreed to the terms of the contract and intended to be bound by them, and
(5) whether "a reasonable person would conclude, from the words and
conduct of each party," that there was an agreement between plaintiffs and
Solutions. In a subsequent post-trial
hearing on April 15, 2010, defense counsel acknowledged that the purpose of
phase one had been to "determine whether or not there was a contract that
could be pursued in a breach of contract claim." His objection was that defendants had not
waived a jury trial on "interpretation and breach." Instead, "[t]he parties' stipulation as
to what Phase I would encompass, and the waiver of a jury trial, was limited to
[the] contract formation issue." (Italics added.) The court was to determine "whether a
contract existed, and the terms would be left for the jury." Counsel later acknowledged that defendants
were "okay with the fact that you
identified the terms. . . . And then the trial is to determine
whether or not that was breached.
[¶] And part of that analysis,
unless the parties waive their jury, is for the jury to determine what those
terms mean, and whether or not the provisions of the contract are going to
apply to the breach." (Italics
added.) He further explained that
defendants were "telling [the jurors that] there is a contract, but it's
up to them to . . . determine what it meant. And if what it meant means there was a
breach, or not a breach." The
court, however, noted that in trying the issue of whether a contract had been
formed, it had found only uncontradicted evidence, which allowed it to
interpret the contract terms.
The
record of the pretrial and post-trial proceedings clearly indicates that the
court did not overstep the bounds of the issue it was asked to decide. Whether the court correctly determined that a
contract was formed is a question Sands attempts to answer, but we need not
address it because the focus of defendants' appeal is on the deprivation of
their right to a jury trial, not the substance of the court's ultimate
conclusion in phase one. Because the
court clearly made its findings in accordance with what it was asked to do, we
must conclude that defendants invited any procedural error in the court's
determination of the contract-formation issue in phase one of the trial. (See, e.g., Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 212
["Under the doctrine of invited error, when a party by its own conduct
induces the commission of error, it may not claim on appeal that the judgment
should be reversed because of that error"].)
Furthermore,
appellants have not demonstrated error
in the court's delineation of the contract terms. Appellants are correct that a jury may
interpret the language of a contract when the contracting parties' intent
depends on the credibility of extrinsic evidence. The credibility determination
itself may properly be a jury issue.
"Interpretation of a written instrument becomes solely a judicial
function only when it is based on the words of the instrument alone, when there
is no conflict in the extrinsic evidence, or when a determination was made
based on incompetent evidence." (City
of Hope Nat. Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395,
citing Parsons v. Bristol Development Co.
(1965) 62 Cal.2d 861, 865 and Estate of
Platt (1942) 21 Cal.2d 343, 352.)
On
the other hand, "[t]he 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; see also Civ. Code, § 1639
["When a contract is reduced to writing, the intention of the parties is
to be ascertained from the writing alone, if possible"].) Thus,
"[w]hen the contractual language is clear, there is no need to consider
extrinsic evidence of the parties' intentions; the clear language of the
agreement governs." (EFund Capital
Partners v. Pless (2007) 150 Cal.App.4th 1311, 1322; see also
Co. (2006) 40 Cal.4th 19, 27 [parties' mutual intent "is to be
inferred, if possible, solely from the written provisions of the
contract"].) Here, the issue to be
tried by the court was not the interpretation of ambiguous terms but whether a
contract was formed. The court properly
determined that issue, as it had been asked to do, by finding that, contrary to
defendants' position, the parties had in fact reached a contract when Putney
and Sterling signed the Consent Agreement.
The court merely set forth the unambiguous terms the parties had reached
through their negotiations in April 2004.
The court then left the question of breach for the jury, as defendants
had requested in their motion in limine.
3. Directed Verdict
on Breach
Before
the jurors began their deliberations plaintiffs moved for a directed verdict on
breach of contract. The court denied the
motion, commenting that it had not already decided in phase one whether
"portions of the contract" had been "satisfied," nor had
phase one determined the first date on which Solutions was obligated to perform
its obligations. As noted earlier,
however, the court did instruct the jury that a contract had been formed
between Solutions and TAT and between Solutions and Sands, which allowed
plaintiffs to receive a "pro-rata share of any recovery from the [NSC]
litigation after deduction of attorneys' fees and litigation costs and payment
to ZF Micro Devices' creditors."
Appellants
contend that notwithstanding its formal ruling, the trial court impermissibly
directed a verdict on the issue presented to the jury in phase two, whether
Solutions breached its contracts with
Sands and TAT. According to appellants,
the court relied on its findings in phase one "to resolve all contract
issues and eliminate all defenses," leaving "no room for a jury to decide
there was 'no breach' " but only a mathematical computation of each
plaintiff's share of the NSC proceeds.
In other words, a de facto directed verdict occurred "because the
'evidence' in the form of the court's own decision, and exclusion of all 'defenses,'
permitted only one outcome—and that was to be augmented solely by a mathematic
computation." Appellants urge this
court to overturn the asserted directed verdicts because "the limited
'evidence' that was permitted, construed broadly in appellants' favor [citation]
establishes that Solutions had no 'contracts' with TAT and Sands, nor did
Solutions 'breach' any such contract(s), nor did the Solutions Series B
investors become fraudulent transferees by receiving their promised return on
their investments."
The
first part of appellants' challenge merely revisits their previous contention,
that the court should not have determined the contract-formation issues. We
have already concluded, however, that the court did not err in deciding whether
the alleged contracts existed and on what terms. Whether Solutions breached those contracts was not subjected to a directed verdict,
but was left to the jury. While it is
true that the findings of breach and damages were easily established in phase
two, that predictability was the product of the indisputable fact that
Solutions did not distribute its recovery according to the contract terms. The specific evidentiary rulings precluding
the contradiction of the contract-formation findings were well within the
court's discretion. (See
Cal.App.4th 229, 281 [trial court's evidentiary rulings are reviewed for abuse
of discretion].)
At
one point during trial on this cause of action the defense attempted to
introduce expert testimony about "whether or not [plaintiffs] get money
back from the individually named defendants. That's it. No more. No
less." Plaintiffs objected, arguing
that the defense was merely trying to impeach the expert on his belief
regarding the date the contract was formed, which had already been decided by
the jury in determining breach.
The
court gave the defense "some leeway" to adduce evidence related to
the time payment was due, as long as that evidence did not intrude into the
issue of contract formation. Counsel
assured the court that "that's all [he] intended to do." But defense counsel further sought to show
through examination of the expert that "Solutions was unaware of any
contract as part of a good faith defense."
Counsel insisted that he was not delving into the issue of contract formation;
his focus was instead "whether or not our clients believe that there was a
contract or obligation with TAT and Sands.
And whether they were aware of that obligation at the time that the
money was distributed."
Subsequently
the court heard argument on the language of the instructions to be given on
fraudulent transfer and the extent to which Feldman could testify regarding his
understanding of the parties' relationships.
The defense again wanted the jury to understand that Feldman and
Solutions never knew that a contract existed with TAT or Sands. The defense represented that its "narrow
focus [was] whether or not there was a good faith belief in the existence or
non[-]existence of a contract or obligation to the plaintiffs." The court pointed out, however, that the
proper focus was the good faith inherent in the transaction between the
individual defendants and Solutions, not
the contract between Solutions and the plaintiffs. The court thus rejected defense evidence
suggesting mutual mistake, waiver by plaintiffs, or plaintiffs' admission by
silence. These contract defenses, the
court ruled, were irrelevant and misleading to the jury, especially because any
belief that there was no contract was based on an incorrect understanding of
the law.
Defense
counsel responded that the transferee defendants' knowledge of the separate
obligations was relevant to whether their own agreements with Solutions were
entered into in good faith. He stated
that these defendants had testified in their depositions that they had been
unaware of the communications between Feldman and Putney or the resulting
contract between Solutions and TAT. He
wanted to extend this reasoning further to Feldman himself, on the theory that
Feldman "didn't know about any contract," and "he believed that
he didn't have to pay [plaintiffs] until later, if there was a sufficient
recovery. Plaintiffs, however, noted
that Solutions was the transferor, not a transferee; thus, good faith was a defense
held by the individual defendants, but not by Solutions.
The
trial court instructed the jury on fraudulent transfer with CACI Nos. 4200,
4201, 4203, and 4205, and with CACI No. 4207 on the affirmative defense of the
transferee defendants' good faith.
During
argument in phase three plaintiffs urged the jury to view the transfer to the
individual defendants as having been made with the intent to hinder, delay, or
defraud TAT and Sands. TAT's counsel
portrayed each transferee defendant as "an insider, relative, or business
acquaintance or friend" of Feldman, which suggested an intent of Solutions
to defraud TAT. Addressing the
affirmative defense, counsel argued that the defendants had not taken the
assets from Solutions in good faith and for reasonably equivalent value.
suggestion that Feldman was not credible in testifying that he did not think he
had an obligation to pay TAT or Sands out of the settlement proceeds because he
did not believe he had an agreement to do so.
And that lack of credibility, counsel argued, demonstrated an actual
intent to defraud TAT and Sands.
To
the extent that defendants wanted to prove waiver, mistake, and admission by
silence, the court was within its discretion under Evidence Code
section 352 to preclude evidence of post-contract discussions to show that
these were legally viable defenses to the contract. Defense counsel was correct that the
existence of a contract did not dispose of the issue of fraudulent intent in
transferring the NSC proceeds to the individual defendants. Feldman was in fact permitted to testify that
on April 23, 2004, and later, in June 2004, he did not believe there was a
contract between TAT and Solutions. But
the court properly made a distinction in the admission of testimony between the
credibility of Feldman's belief that
he had not entered into a contract and his legal conclusion that a contract did
not exist. Only the latter was
precluded, and the jury was asked to determine whether Feldman was credible
when he testified that he did not believe he had an obligation to pay TAT or
Sands because he was unaware of the existence of an agreement. Feldman's reasons for that belief would have
contradicted the previously established fact that the parties had expressed mutual
assent in reaching agreement in April 2004.
Appellants offer no specific reasons why the court's restriction of this
evidence in phase three constituted an abuse of discretion.
4. Order for
Separate Trial of the Cross-Complaint
On
March 11, 2009 Devices and Solutions were granted leave to file their
cross-complaint against TAT. At the same
time the trial court agreed to consolidate the entire action with an existing
lawsuit brought by Kennedy against Devices, Solutions, and Feldman
(1-05-CV035532).
name="_ftnref16" title="">[16] In allowing the
cross-complaint Judge Komar found that the pleading "arises out of the
transactions, circumstances, and occurrences that are at issue in the related
actions and it is a mandatory cross-complaint." Accordingly, on March 16, 2009 Devices and
Solutions filed the cross-complaint against TAT, alleging breach of fiduciary
duty, negligent and intentional
interference with prospective economic advantage, and conspiracy to
destabilize the management of Devices and take control of the company.
That
pleading, however, was filed during the pendency of yet another separate
lawsuit (1-09-CV-134970), with identical causes of action, brought by Devices
and Solutions against TAT, Putney, and Egolf on February 17, 2009. On March 24, 2009, Devices and Solutions
dismissed TAT from the claim of breach of
fiduciary duty in the separate action.
The conspiracy claims were subsequently removed from both the second
amended complaint against Putney
TAT. Ultimately only one claim, for
breach of fiduciary duty, remained in the cross-action.
Thus,
by December 21, 2009, when Judge Zepeda was considering the motion to order
separate trials, the causes of action in the operative cross-complaint had been
reduced to a single cause of action for breach of fiduciary duty against
TAT. The court expressed the view that
this claim and the main action were not related "at all": The
plaintiffs' complaint was "merely the pro rata agreement. And if the shareholders of Devices should
have been paid part of the settlement proceeds from the NSC action. And the cross-complaint has to do with how
the company was run when it was still in existence, and if there was any breach
of fiduciary duties." The court
noted that while the same entities were involved, not all of the parties were
the same in the two pleadings, and the alleged breach of the fiduciary duty
took place before even the NSC lawsuit was initiated. "It has nothing to do with whether or
not there is a pro rata agreement between Solutions and [the Devices]
shareholders . . . I just don't see that." Accordingly, the court decided to
"sever" the first amended cross-complaint and consolidate it with the
separate action in 1-09-CV-134970.
Appellants
now argue in essence that Judge Zepeda should have ruled consistently with
Judge Komar's view of the action and cross-action—that is, by confirming that
the first amended cross-complaint "arises out of the transactions,
circumstances, and occurrences that are at issue in the related actions and it
is a mandatory cross-complaint."
Appellants concede that an order for separate trials is a matter left to
the discretion of the trial court; they suggest, however, that such discretion
is abused when the separate trial will occur in another lawsuit before
different juries. By indulging in this
"evil," the trial court "removed any possibility [that]
Solutions could recover against TAT or obtain any set-off against the 'contract'
damages TAT sought to impose against Solutions."
A
trial court may order a separate trial of any cause of action asserted in a
cross-complaint "in furtherance of convenience or to avoid prejudice, or
when separate trials will be conducive to expedition and economy." (Code Civ. Proc., § 1048, subd. (b).) We will not interfere with the court's
exercise of that discretion absent a manifest abuse. (McLellan v. McLellan (1972) 23 Cal.App.3d 343, 353.) We see no such abuse of discretion here. The cross-complaint accused TAT, through
Putney and (to a lesser extent) Egolf, of various acts that undermined the
success of Devices from 1997 until
early 2002, when Solutions acquired the Devices assets. TAT's lawsuit, on the other hand, did not
name Devices as a party; it was brought against Solutions and its Series B investors for acts occurring in
2004. The court could properly conclude
that the causes of action in the first amended cross-complaint belonged with
its companion case, in which identical claims were asserted. No error appears on this record.
5. Form of the
Recovery from the Transferee Defendants
Appellants
next contend that the amounts awarded to TAT and Sands were forbidden by Civil
Code section 3439.08, subdivision (b).
Uniform Fraudulent Transfers Act (UFTA), states that a creditor entitled to
avoidance of a fraudulent transfer (defined in section 3439.04) "may
recover judgment for the value of the asset transferred, as adjusted under
subdivision (c),
name="_ftnref21" title="">[21] or the amount necessary to satisfy the creditor's claim, whichever
is less." According to appellants,
the judgment actually awarded plaintiffs $9,849,523.00, "
more than the [$6,731,307.33] necessary to satisfy their creditors[']
claims."
name="_ftnref22" title="">[22] The UFTA, they argue,
"does not authorize a creditor
to invoke both remedies or to collect damages exceeding the value of the
disputed asset or debt."
We
find no violation of section 3439.08.
The judgment against each transferee defendant equals the amount
fraudulently transferred (the amount he or she received from Solutions, less
the value of that defendant's contribution, according to the jury's verdict),
plus pre- and post-judgment interest and costs.
clear that TAT's total recovery against all
of the defendants "shall not collectively exceed the amount of
$4,460,447.70," plus costs and postjudgment interest; and Sands' total
recovery could not exceed $2,135,859.63 plus costs and postjudgment
interest. Thus, the judgment in effect
awarded no more than "the amount necessary to satisfy [each] creditor's
claim," as stated in section 3439.08, subdivision (b).
6. Exclusion of
Feldman from the Courtroom
Appellants
finally complain that Feldman's due process rights were violated during the
trial when he was ordered out of the courtroom and, later, from any part of the
courthouse where the jury might see him.
As they implicitly recognize, however, a civil litigant's due process
right to be present during trial gives way to the court's prerogative to
control disruptive behavior in the courtroom.
(See Helminski v. Ayerst
Laboratories, a Div. of American Home Products Corp. (6th Cir. 1985) 766
F.2d 208, 216-217.) We find no abuse of
discretion or constitutional violation.
The
behavior leading to Feldman's exclusion started in December 2009, during
motions in limine. On December 21
counsel and the court were discussing a limitation on evidence of the financial
conditions of the defendants, when Feldman interrupted TAT's attorney, saying,
"No. I can't stand it. He's just lying." The court told him to sit down. Shortly thereafter defense counsel, Andrew
Castricone, apologized on Feldman's behalf.
Before the court adjourned the hearing Feldman himself apologized,
saying he was "under a lot of stress."
On
April 26, 2010, during cross-examination of Feldman, he was asked about an
e-mail correspondence regarding the Kennedy foreclosure. TAT's counsel, Joseph Demko, asked, "The
rights to sue National Semiconductor were Devices' rights to sue National
Semiconductor. Right?" Feldman answered, "As was the chip. As was everything before Mr. Putney destroyed
the company." The court struck this
answer, ordered the jurors to disregard it, and excused them for a break. Demko then complained to the court about
Feldman's "blatant attempt" to bring before the jury "unclean
hands" evidence and the cross-complaint, which the court had previously
excluded. "In addition, in front of
the jury, Mr. Feldman decided he had to hand Mr. Putney a letter. I haven't opened it. I don't know what theatrics he now wants to
engage in. But he's also making huffing
and puffing noises; throwing his hands up in the air at rulings, etc. [¶]
The theatrics have to stop."
Feldman was trying to create a mistrial.
Sands' attorney reported having received a similar letter in the jury's
presence. Feldman interjected,
"That's not true."
The
court then addressed Feldman: "You
need to be quiet and sit down. Sit
down. Sit down now. I told
you earlier that there would be no outbursts from you. And if there were, I would send you outside. Do you remember that, during the first phase
of the trial, Mr. Feldman? [¶] THE WITNESS:
Yes. [¶] THE COURT:
Then you need to maintain your behavior.
Do you understand that? [¶] THE WITNESS:
Yes." Castricone agreed to
admonish Feldman, as he had in the past.
Feldman, Castricone explained, was "under a great belief that the
Court is biased as to . . . himself, his company, his counsel, and
[i]n these proceedings." The court
also instructed Feldman not to pass anything in the courtroom, except to his
attorney.
After
further discussion, Castricone apologized for Feldman's
"outburst." He again stated
that he had admonished Feldman not to introduce any testimony or other evidence
that had been excluded and not to communicate with opposing counsel or parties
in front of the jury. The court reminded
Feldman, "Mr. Feldman, it's really important that we maintain the proper
decorum in the courtroom.
Feldman also agreed-- namely, answer
only the questions that are asked, and while testifying, follow the rules and
admonitions he had received from his attorney.
Two
days later, the court learned that Feldman had been publishing inflammatory
statements about the trial proceedings through his Twitter account. Sands' attorney was concerned that a juror
might receive communications that Feldman might convert into a mistrial. Defense counsel maintained that Feldman was
only asserting his free-speech rights within this very limited medium. He pointed out that there was no gag order in
place, and the jurors could simply be reminded of their obligation not to
perform any internet searches about the parties or issues in the case. Nevertheless, counsel represented that
Feldman had agreed not to post any more comments about the lawsuit. At the end of that day the court elicited an
agreement by all counsel that everyone involved in the case would not
"tweet, Twitter, blog, whatever"—that is, publish in any form-- any
statements about this case until its conclusion. Defense counsel promised to tell Feldman, who
was not then present.
On
May 5, 2010, Feldman was being cross-examined again, this time regarding his
report to shareholders about the initial $29 million jury verdict in the NSC
litigation, and Putney's e-mail asking whether TAT would be sharing $15 million
in a pro rata distribution. Feldman had
previously testified that he had not understood what Putney meant by this
question. Demko attempted to impeach him
with his deposition testimony, which produced the following colloquy: "[Q.] Do you recall at your deposition
you were sworn to tell the truth, just like you were sworn to tell the truth
here today and in prior testimony?"
[¶] A. Just like Mr. Putney and
Mr. Sterling were." The court
sustained Demko's objection as nonresponsive.
Continuing
his examination later that day, Demko attempted to elicit Feldman's admission
that the April 23, 2004 correspondence was part of a series of letters aimed at
persuading Putney to sign the Consent Agreement. The court stopped Demko from arguing about
documents produced in discovery or anything related to contract formation. All counsel, the court reminded them, had to
confine their questions to the credibility of his claim that he did not know
there was an agreement to distribute the NSC proceeds pro rata among Devices
shareholders. Resuming his examination,
Demko confronted Feldman with his deposition testimony regarding his professed
intention to pay Devices shareholders and creditors pro rata.
or controlled 21.7 percent of the shares in Devices. Is that correct? [¶] A.
They still do. [¶] Q. So the answer is yes? [¶] A.
Yes. And I still own 12.3
percent." The court struck this
answer as well.
Shortly
thereafter Feldman was asked about
| Description | In this appeal we address several procedural issues raised by defendants ZF Micro Solutions (Solutions); its principal, David Feldman; and a number of individual investors in Solutions. Appellants contend that the trial court deprived Solutions of a jury trial on every element of breach of contract in consolidated actions brought by plaintiffs TAT Capital Partners, Ltd. (TAT), Sands Brothers Venture Capital LLC, and SB New Paradigm Associates LLC. Appellants further argue that the court failed to find that TAT lacked standing to prosecute the action, essentially directed a verdict on the jury portion of the trial, and impermissibly severed Solutions' cross-complaint against TAT. As to the individual defendants, appellants contend that the court violated Civil Code section 3439.08, subdivision (b), by imposing more than $9 million in damages on them for being "fraudulent transferees" even though the amounts claimed by plaintiffs totaled only $6.7 million. Finally, appellants assert a deprivation of Feldman's due process rights arising from the court's exclusion of him from the courtroom and subsequently from the areas through which the jurors would pass. We find no error, however, and therefore must affirm the judgment. |
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