KUMAR, J.
This is an appeal from a judgment entered after a jury rendered a verdict on a fraud complaint in favor of plaintiffs, Young Sik Kye and Hyon Ju Kye (Mr. and Mrs. Kye respectively). The fraud and related claims arose out of the 2005 sale and purchase of a the Secret Garden Restaurant. The verdict was rendered against defendants, EAA Capital, Inc. (EAA) doing business as Cal Vest Realty, Eun Jip Kim, David Kim, and John Jung Hoon Lee, who acted as real estate brokers for the purchase of the restaurant.
Plaintiffs filed their complaint on December 20, 2007. The first amended complaint, which is the operative pleading, was filed on June 11, 2008. The complaint alleges facts concerning plaintiffs' purchase of the Secret Garden Restaurant. A brief summary of the complaint follows.
David and Eun Jip were brokers for EAA. Mr. Lee was also employed by EAA and was the real estate agent who represented the seller of the restaurant. David, Eun Jip, and Mr. Lee made false representations to plaintiffs regarding its profitability, rental expense of the land upon which it was located, and tax expense associated with running the restaurant. In addition, a $100,000 check provided by Mr. Kye to David for a deposit on the purchase price was not to be cashed until a purchase agreement had been signed. However, the check was deemed by David to be a brokerage fee and was deposited in a bank account of Haak Capital, Inc. — a company that had the same business address as EAA but was listed on the California Secretary of State's web site as being dissolved.
After purchasing the restaurant, plaintiffs discovered the misrepresentations. While struggling to keep the business open, plaintiffs were eventually unable to pay the property tax bills and rent. They were evicted from the premises and lost their entire investment.
Plaintiffs sought damages, indemnity and declaratory relief under a number of theories including fraud (intentional misrepresentation, failure to disclose, constructive), misrepresentation, conversion, breach of fiduciary duty, and negligence. Plaintiffs also requested equitable indemnification and declaratory relief. Defendants answered the complaint and asserted a number of affirmative defenses including the statute of limitations and plaintiffs' negligence.
Yong Sik Kye and his wife Hyon Ju Kye moved to New York from Seoul, South Korea in 1987. In 1988, Mr. Kye purchased a beauty salon in Queens, New York for $8,000. He eventually opened four more salons. In 1990 or 1991, he opened a wholesale beauty supply business. Mr. Kye sold the beauty salon and supply businesses in 1998 for about $400,000 to $500,000.
In 1998, Mr. Kye moved to California to run a dry cleaning business. He purchased a dry cleaning business in Riverside in December 1998 for $340,000. In January 2005, Mr. Kye sold the dry cleaning business for $650,000.
Mr. Kye knew David from South Korea where they attended the same schools and church. On April 25, 2005, David and Mr. and Mrs. Kye attended a social function at a mutual friend's home. David showed Mr. Kye a flyer which the parties referred to as a "set-up sheet" and explained that he had a profitable restaurant opportunity for Mr. Kye. The restaurant was owned by Kyong Chun Hong. David said that, if Mr. Kye was interested in purchasing the restaurant, Mr. Kye should make a deposit and all the financial information would be released.
On April 26, 2005, Mr. and Mrs. Kye went to Cal Vest Realty to begin the process of purchasing the restaurant. David and Eun Jip were plaintiffs' co-agents in the restaurant purchase. Pursuant to David's request, Mr. Kye provided David with a $100,000 check, payable to Haak Capital, Inc., for a deposit. Later that day, David asked Mr. Kye for a second check for $30,000 made payable to Hanmi Escrow. Mr. Kye wrote the check on an account which was owned jointly by Mr. and Mrs. Kye. Mr. Kye obtained a $900,000 loan from Hanmi Bank to purchase the restaurant.
Mr. Kye was the bookkeeper for several of his prior businesses. He was provided with documentation of sales history for the restaurant for 2003, 2004 and January through April of 2005. David gave Mr. Kye information about vendor expenses. Mr. Kye used the information as a basis for purchasing the restaurant. Mr. Kye was not given a copy of documents reflecting a net annual income for the business of $187,738, for the year 2004. Mr. Kye was also not given Mr. Hong's 2002 and 2003 tax returns which contained information that was substantially different from the information in the books of the restaurant.
David told Mr. Kye the original asking price was $1.8 million. David said Mr. Hong was willing to carry over $200,000 (through a personal loan to Mr. Kye) so the escrow papers would only show $1.6 million. When Mr. Kye received the estimated closing statement the sales price was listed as $1.5 million. David told Mr. Kye that the $100,000 payment Mr. Kye had given as a deposit had been given to Mr. Hong "under the table." Eventually, due to the condition of the property, Mr. Hong offered to eliminate the owner's carryover — effectively lowering the purchase price.
On July 29, 2005, when Mr. Kye received the closing settlement statement, he asked Mr. Hong about the $100,000 check. Mr. Hong denied receiving the $100,000. Mr. Kye did not ask David about the $100,000 because he believed Cal Vest Realty had kept the check.
Plaintiffs called Mr. Lee to testify as a hostile witness pursuant to Evidence Code section 776. Mr. Lee testified that the restaurant purchase involved a dual agency because Cal Vest Realty represented both the seller and the buyer. Mr. Lee considered himself to be a fiduciary with disclosure duties to his client. According to Mr. Lee, he had a duty to collect and disclose information to the buyer so that an informed judgment could be made with respect to the purchase of the restaurant. David and Eun Jip admitted they were fiduciaries with disclosure duties regarding the restaurant purchase. Plaintiffs' expert, Alan Wallace, a business opportunity sales specialist, testified that defendants had fiduciary duties to obtain, verify and disclose all material information to the buyer.
Mr. Hong told Mr. Lee that the restaurant had gross receipts of $300,000 per month, rent of $33,820 and net income of $50,000 per month. Mr. Lee did not do anything to independently verify the information. Mr. Lee made handwritten notes of the figures Mr. Hong gave him. When Mr. Lee obtained Mr. Hong's 2002 and 2003 tax returns, there was a "tremendous disparity between [the handwritten notes and tax return] numbers." Mr. Lee did not review the records himself. Mr. Hong's individual tax return for 2003 reflected a net income of $28,807 for the business with gross receipts of $1,389,816 rather than $50,000 per month profit with $4.2 million in sales receipts.
Mr. Lee provided the handwritten notes reflecting Mr. Hong's statements to David. David prepared the flyer, which utilized Mr. Lee's figures. However, instead of reflecting $300,000 per month in gross receipts, David's sheet showed $350,000 per month in gross receipts. Mr. Lee and David discussed the discrepancies between the tax returns and Mr. Hong's claims regarding profits. Mr. Hong provided a profit and loss statement to Mr. Lee, which showed the annual net profits for 2004 were $187,738.20. This was about $15,644.85 per month in profits. Mr. Lee did not recall which documents he gave to David but he did recall telling David to pass the information along to Mr. Kye.
Mr. Kye did not receive any individual tax returns for Mr. Hong for 2002 or 2003 prior to the close of escrow. The first time Mr. Kye saw the 2002 and 2003 tax returns was at Mr. Lee's deposition. Mr. Hong's tax return for 2002 showed that he made a total profit of $42,688 for the year from the business. Mr. Hong's 2003 tax return showed he had a business profit of $44,619 for the year. In addition, a profit and loss statement for 2004 showed a net income for the restaurant of $187,738.20. If Mr. Kye had known about the two tax returns in July of 2005, he would not have purchased the restaurant. This was because the profit represented to Mr. Kye in the set-up sheet and the tax returns differed by 20 times; and the tax returns did not justify the purchase price of the restaurant.
Mr. Kye attempted to independently verify the financial information, but David told him Mr. Hong would not permit him to do so. When Mr. Kye persisted, David told Mr. Kye that David had already independently verified the information. However, at trial, David admitted he had not done anything to verify the accuracy of the information concerning the gross sales and profits of the business.
The restaurant was located on two separate properties. One portion of the property was owned by Sue Choi while the other was owned by Renee Briggs. The rent on Ms. Choi's property was $30,000 per month. The rent for the Briggs property was $3,820 per month. In April or May 2005, Mr. Kye received a lease between Yong S. Lee and Mr. Hong. David told Mr. Kye there were two landlords: Sue Choi and a "ground lease." The subject of additional rent did not come up in the conversation. Mr. Kye thought that $30,000 a month represented the entire rent for the restaurant. Defendants told Mr. Kye that the total rent was $33,820 per month which included taxes of $3,600 per month.
Mr. and Mrs. Kye signed a lease with Ms. Choi. Mr. Kye subsequently signed an amended and restated lease in which he agreed to pay $31,200 per month. The lease between Mr. Hong and the prior owner did not provide that Mr. Hong was responsible for the ground lease. Rather, the term that Mr. Hong was responsible for the ground lease was in an addendum to the lease. Ms. Choi had the ground lease provision inserted when she purchased the property in 2004. She wanted the tenant to know the tenant was responsible for the rent on the ground lease. Mr. Kye did not receive any addendum to the Hong/Lee lease. The first time Mr. Kye saw the addendum was in March of 2009 at Ms. Choi's deposition. After escrow closed, David told Mr. Kye to make the $3,820 CAM (i.e., common area maintenance) payment to Mr. Briggs. David subsequently told Mr. Kye that the money was for the ground lease payment.
Ms. Choi bought the property in 2004 with the intent to develop it. Ms. Choi's lease expired in March 2009 and had a five-year option. Ms. Choi told Mr. Lee that she would not extend the lease term beyond March 2014. Ms. Choi believed the information should be conveyed to the buyer because the lease would only have seven years. Ms. Choi did not want the buyer to think the lease would be extended. Defendants never conveyed this information to Mr. Kye.
After Mr. Kye purchased the property, it was reassessed. Mr. Kye was given a document which stated the property taxes were $3,600 per month. Mr. Lee knew Mr. Hong was paying about $40,000 a year in taxes and had no idea the taxes would actually be about $85,000 a year.
In August 2005, Ms. Choi sent Mr. Kye tax bills for the property which pertained to July 2004 to June 2005 —a period of time when Mr. Hong occupied the premises. Mr. Kye showed the bills to David, who was surprised. David did not know about the taxes. David spoke to Eun Jip, who stated that Mr. Kye would have to pay the taxes. David also said that Cal Vest Realty would help Mr. Kye pay the taxes. David loaned Mr. Kye $15,000 to pay the taxes and said he would loan Mr. Kye more money if necessary.
Mr. Kye filed a declaratory relief action against Ms. Choi to determine whether he was responsible for the taxes under the lease terms. After Mr. Kye filed his complaint, Ms. Choi served a notice to quit on Mr. and Mrs. Kye for failure to pay the taxes. Ms. Choi filed an unlawful detainer action and obtained a judgment in the amount of $289,344.10 plus $34.67 per day in interest.
While the unlawful detainer action was pending, Ms. Choi offered Mr. Kye $700,000 for the restaurant. He refused the offer.
Mr. Lee knew Mr. Kye had paid a $100,000 buyer's commission to Cal Vest Realty through a check made payable to Haak Capital, Inc. The $100,000 check was negotiated and deposited on May 4, 2005 into Cal Vest Realty's checking account. Haak Capital, Inc. was not a licensed real estate broker and, therefore, could not accept a real estate commission. The commission was required to be disclosed in writing to both sides.
Plaintiffs' expert, Mr. Wallace testified that the $100,000 payment was a breach of defendants' fiduciary obligations. This was because it was made payable to Haak Capital, Inc. and the funds were placed in Cal Vest Realty's general business account rather than a trust account.
Economist, Barbara Luna, testified that plaintiffs' out-of-pocket losses were $2.6 million and their lost profits/benefit of the bargain damages were $4.2 million.
By special verdict, the jury separately awarded Mr. Kye $1.125 million and Mrs. Kye $1.125 million for a total of $2.25 million. For the conversion claim, the jury awarded Mr. Kye $100,000 with an additional award of $21,550 in interest. The trial court entered judgment in accordance with the jury's verdict. Defendants filed a timely appeal from the judgment.
Defendants assert Mrs. Kye has no standing to pursue claims against them. Code of Civil Procedure section 367 provides: "Every action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute." A real party in interest is generally defined "as the person possessing the right sued upon by reason of the substantive law." (Killian v. Millard (1991) 228 Cal.App.3d 1601, 1605; accord Doe v. Lincoln Unified Dist. (2010) 187 Cal.App.4th 1286, 1291.) A real party in interest has also been defined as a person, who has "an actual and substantial interest in the subject matter of the action and who would be benefited or injured by the judgment in the action." (Friendly Village Community Assn., Inc. v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220, 225; accord Martin v. Bridgeport Community Ass'n, Inc. (2009) 173 Cal.App.4th 1024, 1031.) Standing is a legal question. (Great Lakes Const., Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1354; IBM Personal Pension Plan v. City and County of San Francisco (2005) 131 Cal.App.4th 1291, 1299.)
The evidence established Mrs. Kye had a substantial interest in the restaurant and therefore had standing. Mr. and Mrs. Kye operated a beauty salon and beauty supply business in New York which they sold at a profit. The profits from those businesses were used to purchase and operate a dry cleaning business in Riverside which the couple operated and sold for $650,000. Mr. Kye testified that the money used to purchase the restaurant at issue in this case was purchased with the sales proceeds from the couple's dry cleaning business. A $30,000 escrow deposit to purchase the restaurant was drawn on the couple's joint account.
In addition, Mrs. Kye was signatory to the lease for the premises upon which the restaurant was to operate. Plaintiffs were evicted from the restaurant in an unlawful detainer action. The unlawful detainer action was clearly interwoven with the circumstances surrounding the purchase agreement. As part of the purchase agreement, Eun Jip's lawyer, Richard Kim, negotiated some of the lease terms with Ms. Choi. Under the lease terms, the Kyes became obligated to pay a tax bill during a time period which Mr. Hong was operating the restaurant. Furthermore, due to the lease terms, the Kyes were required to pay a much larger amount than they initially thought because the real property was reassessed after Ms. Choi's purchase of it. Ms. Choi obtained a $300,000 judgment against Mr. and Mrs. Kye.
The record shows that the Kyes lost their entire investment based on conduct the jury determined was fraudulent. Mrs. Kye benefits from the judgment in that it allowed her to recoup the couple's $650,000 investment, their $30,000 deposit and relief from the $300,000 unlawful detainer judgment. Accordingly, Mrs. Kye clearly had standing to sue for damages stemming from the restaurant purchase.
Alternatively, defendants assert there is no substantial evidence to support an award of damages to Mrs. Kye separate and apart from Mr. Kye's damages. Implicit in this argument is that the jury awarded duplicate damages. We disagree that the damages award must be set aside. The award was rendered by special verdict, which instructed the jurors that Mr. Kye and Mrs. Kye could have damages awarded separately. The trial court instructed the jury: "There are two [p]laintiffs in this case." The jury was instructed that it "should decide the case of each [p]laintiff separately as if it were a separate lawsuit." The jury was further instructed that "[e]ach [p]laintiff is entitled to separate consideration of his or her own claims." Defendants' failure to object to the instructions and the special verdict form has resulted in a waiver of the issue. (Sperber v. Robinson (1994) 26 Cal.App.4th 736, 742-743; Electronic Equipment Express, Inc. v. Donald H. Seiler & Co. (1981) 122 Cal.App.3d 834, 856-857.)
Nevertheless, the verdict was consistent with plaintiffs' damages evidence. The special verdict required the jury to make findings with respect to each element of plaintiffs' causes of action. The causes of action were set forth separately as to Mr. Kye and Mrs. Kye. The only exception was for the conversion cause of action which applied only to Mr. Kye. Plaintiffs' economic expert, Ms. Luna, testified that plaintiffs suffered out-of-pocket damages of $2.6 million or benefit of the bargain damages of $4.2 million. Excluding the conversion claim, the jury awarded a combined total of $2.25 million to the Kyes on their various tort claims. This was reasonably close to the $2.6 million out-of-pocket damages plaintiffs requested and well below the benefit of the bargain damages. The record does not support the conclusion duplicate damages were awarded.
Defendants claim the trial court erred by instructing the jury with a modified version of Judicial Council of California Civil Jury Instruction (CACI) No. 1906 in response to the following question from the jury: "If a misrepresentation was made to Mr. Kye by the defendants, and based on that, Mrs. Kye took a particular action does this mean that the defendants are responsible for the misrepresentation to Mrs. Kye?" The trial court responded to the jury's query by asking if both parties agreed to instruct the jury with CACI No. 1906. Plaintiffs' counsel, Jerry L. Freedman, as well as defense counsel, Traci Lagasse, agreed to the trial court giving CACI No. 1906. However, Ms. Lagasse's acquiescence was made with a request that she be allowed to make a record.
Ms. Lagasse stated: "Right. My only hesitation with [CACI No.] 1906 is I have not yet done the research to see if the other person also is a [p]laintiff as a well and ... whether this is directly on point. Reading it the way it's crafted it seems it's on point. That's my only hesitation right now." To which the court replied: "And whether that could relate to another [p]laintiff. Is that what your concern is?" Ms. Lagasse replied: "Right. Because [CACI No.] 1906 says to another person but — I mean, I do have to concede, it seems on point. I just haven't had the opportunity to further research the issue." The trial court noted: "The way 1906 is in the CACI instruction it appears to take into consideration it could be one [p]laintiff, [p]laintiff X and [p]laintiff Y. Anyway, that's my view."
The trial court then instructed the jury with a modified version of CACI No. 1906 as follows: "Defendants are responsible for a representation that was not made directly to Mrs. Kye if they made the representation to Mr. Kye or to another person, intending or reasonably expecting that it would be repeated to Mrs. Kye."
Defendants claim the instruction was erroneous because CACI No. 1906 is premised on Civil Code section 1711 which provides: "Deceit upon the public, etc. [¶] One who practices a deceit with intent to defraud the public, or a particular class of persons, is deemed to have intended to defraud every individual in that class, who is actually misled by the deceit." The reference to Civil Code section 1711 in CACI No. 1906 does not equate to instructional error in this case.
Although the instant case does not concern fraud on the public or a class of persons, CACI No. 1906 also cites as authority, Shapiro v. Sutherland (1998) 64 Cal.App.App.4th 1534, 1548; Geernaert v. Mitchell (1995) 31 Cal.App.4th 601, 605-606; and section 533 of the Restatement Second of Torts. "It is true that in order for a defendant to be liable for fraud, he or she must intend that a particular representation (or concealment) be relied upon by a specific person or persons. [Citation.] However, it is also established that a defendant cannot escape liability if he or she makes a representation to one person while intending or having reason to expect that it will be repeated to and acted upon by the plaintiff (or someone in the class of persons of which plaintiff is a member). [Citations.] [¶] This is the principle of indirect deception described in section 533 of the Restatement Second of Torts (section 533): `The maker of a fraudulent misrepresentation is subject to liability for pecuniary loss to another who acts in justifiable reliance upon it if the misrepresentation, although not made directly to the other, is made to a third person and the maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other, and that it will influence his conduct in the transaction or type of transaction involved.' Comment d to section 533 makes it clear the rule of section 533 applies where the maker of the misrepresentation has information that gives him special reason to expect that the information will be communicated to others and will influence their conduct. Comment g goes on to explain that it is not necessary that the maker of the misrepresentation have the particular person in mind. It is enough that it is intended to be repeated to a particular class of persons." (Shapiro v. Sutherland, supra, 64 Cal.App.4th at p. 1548; see also Geernaert v. Mitchell, supra, 31 Cal.App.4th at pp. 605-606.) Both Shapiro and Geernaert involved real estate transaction misrepresentations that were made to individuals — they did not concern fraud on the public or a class of persons.
In this case, the evidence supported the modified CACI No. 1906 instruction. Plaintiffs produced evidence that misrepresentations were made to Mr. Kye about the profitability of a business opportunity. Mr. Kye was a married man, whose wife attended a meeting about the purchase of the business. The $30,000 deposit check to purchase the restaurant was written on the couple's joint account. Mrs. Kye was a party to the lease where the restaurant would operate. A jury could find defendants made representations to Mr. Kye with the intent or with a reasonable expectation that Mr. Kye would repeat the statements to his wife. The trial court properly instructed the jury with the modified version of CACI No. 1906.
Defendants assert there was insufficient evidence plaintiffs were defrauded because there was no misrepresentation or concealment of any material fact. Where sufficiency of the evidence is challenged, our duty begins and ends with a determination of whether there is evidence legally sufficient to support the judgment. (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1053; Gray v. Don Miller & Associaties, Inc. (1984) 35 Cal.3d 498, 503.) All evidence must be viewed in the light most favorable to judgment below and conflicts in evidence must be resolved in favor of the trier of fact's determinations. (Bickel v. City of Piedmont, supra, 16 Cal.4th at p. 1053; Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) This court does not reweigh evidence or resolve credibility issues. (Baxter Healthcare Corp. v. Denton (2004) 120 Cal.App.4th 333, 369; Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630-631.)
"`The elements of fraud, which give rise to the tort cause of action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or "scienter"); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.' [Citations.]" (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) In addition, constructive fraud may be proved by: (1) the existence of a fiduciary relationship; (2) breach of a fiduciary duty to disclose material matters; (3) reliance; and (4) resulting damage. (Civ. Code § 1573; Tyler v. Children's Home Society (1994) 29 Cal.App.4th 511, 548.)
David, Eun Jip, and Mr. Lee admitted that they were fiduciaries with disclosure duties to Mr. Kye. And, the record contains evidence of defendants' misrepresentation and/or concealment of material facts. The set-up sheet was a flyer generated to promote the sale of the restaurant and was printed on the stationary of Eun Jip's business — Cal Vest Realty. Mr. Lee told David the gross monthly income was $300,000. But, David inflated the gross monthly income to $350,000 in the set-up sheet and said that this information had been verified. Although Mr. Kye was told that this figure was verified information obtained from Mr. Hong, all of the defendants testified that they did nothing to verify the figure. David eventually told Mr. Kye the property generated about $50,000 a month in profit based on the statements from Mr. Lee.
David and Mr. Lee claimed they gave Mr. Hong's 2002 and 2003 tax returns to Mr. Kye. However, Mr. Kye denied receiving the tax returns or the 2004 profit and loss statements. Mr. Hong's tax returns established Mr. Hong's representations about the restaurant's gross monthly income and profits were materially inaccurate. Mr. Kye would not have purchased the restaurant if he had known the truth about the actual figures.
Mr. Kye relied on the information given to him by David including representations about the gross sales and profit. David actively discouraged Mr. Kye from making an independent examination of the restaurant's financial records. David assured Mr. Kye that David had made an independent examination and nothing more was needed.
In sum, there was sufficient evidence real estate agents acting in a fiduciary capacity defrauded plaintiffs by misrepresenting the gross monthly income and net profit of a restaurant they promoted to their client. We find no merit to defendants' contention the verdict must be set aside because the restaurant's failure was actually caused by plaintiffs' inexperience and mismanagement.
Defendants claimed the restaurant was lost due to plaintiffs' failure to pay the real property taxes. At trial, defendants asserted that plaintiffs had the opportunity to accept Ms. Choi's offers to purchase the business. However, plaintiffs were only required to plead and prove their injuries were proximately caused by defendants' tortious conduct. (Goehring v. Chapman University (2004) 121 Cal.App.4th 353, 364; Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1818.) The jury had sufficient evidence to conclude that defendants' misrepresentations and concealment were a substantial factor in bringing about plaintiffs' harm. (Williams v. Wraxall (1995) 33 Cal.App.4th 120, 132; Nola M. v. University of Southern California (1993) 16 Cal.App.4th 421, 427.) Defendants' arguments are merely disagreements with the jury's resolution of the causation element of fraud. We have no power to set aside the jury's resolution of disputed factual assertion that defendants' conduct was a substantial factor in plaintiffs' losses. (Landeros v. Flood (1976) 17 Cal.3d 399, 411; OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 869-875.)
Defendants argue the conversion award of $100,000 plus interest must be set aside or modified because the conversion claim was untimely, not supported by sufficient evidence, and contained an interest award. Defendants are incorrect.
The timeliness issue is based on the following facts and arguments. Mr. Kye wrote a check for $100,000 to Haak Capital, Inc. on April 26, 2005. The complaint was filed on December 20, 2007 but did not contain a conversion claim. The conversion claim was added to the action on June 11, 2008 in the first amended complaint. According to defendants, there is no relation back because the misrepresentation and fiduciary issues relate to completely different injuries and damages than a conversion claim.
We agree with plaintiffs that the issue of whether Mr. Kye's conversion claim was time barred under Code of Civil Procedure section 338, subdivision (c) has been waived. "In civil cases, the statute of limitations is not jurisdictional but merely serves a procedural function and constitutes an affirmative defense that is waived unless pleaded and proved. [Citations.]" (People v. Williams (1999) 77 Cal.App.4th 436, 457-458; see also Stokes v. Henson (1990) 217 Cal.App.3d 187, 193.) Defendants asserted the statute of limitations as the seventh affirmative defense in the answer to the first amended complaint. However, defendants did nothing in the lower court to develop their affirmative defense of timeliness. Defendants' failure to pursue the statute of limitations by demurrer, argument or trial briefs, has resulted in a waiver of the issue. (People v. Williams, supra, 77 Cal.App.4th at pp. 457-458; see also Stokes v. Henson, supra, 217 Cal.App.3d at p. 193.)
Defendants also incorrectly assert that Mr. Kye suffered no damages because of the $100,000 check. Mr. Kye wrote a $100,000 check to Haak Capital, Inc. in connection with the purchase of a restaurant from Mr. Hong. According to Mr. Kye, he thought the $100,000 check would be applied to the purchase price of the restaurant and given to Mr. Hong. The check was written to, and cashed by, Haak Capital, Inc., which was not a party to the transaction between Mr. Hong and Mr. Kye. Haak Capital, Inc. released the funds to Cal Vest Realty. Mr. Kye did not receive a credit for the check in the escrow nor was Mr. Hong given $100,000 in funds. Instead of giving the money to Mr. Hong so that Mr. Kye could receive a credit, defendants took the money and converted it to their own use. Mr. Kye was clearly entitled to $100,000 that was converted by defendants.
We also disagree with defendants that the interest award for the conversion must be set aside. Civil Code section 3336 contains a statutory presumption that damages for a conversion claim includes interest. The statute provides: "The detriment caused by the wrongful conversion of personal property is presumed to be: [¶] First—The value of the property at the time of the conversion, with the interest from that time, or, an amount sufficient to indemnify the party injured for the loss which is the natural, reasonable and proximate result of the wrongful act complained of and which a proper degree of prudence on his part would not have averted; and [¶] Second—A fair compensation for the time and money properly expended in pursuit of the property." Thus, Civil Code section 3336 expressly authorizes interest on the value of the property in a conversion claim which is awarded from the time of the conversion. (See Irving Nelkin & Co. v. South Beverly Hills Wilshire Jewelry & Loan (2005) 129 Cal.App.4th 692, 702-704; Strutt v. Ontario Sav. & Loan Assn. (1972) 28 Cal.App.3d 866, 874-875.)
Moreover, defendants' reliance on North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 829 to support a contrary result is misplaced. North Oakland Medical Clinic is distinguishable on its facts because it was a contract action with a request for prejudgment interest. The request was attached to a cost bill and the jury did not award interest. (Id. at p. 827.) Here, the jury determined defendants converted the definite sum of $100,000 for which prejudgment interest at the legal rate of interest was warranted. (Civ. Code, § 3336.) Thus, the trial court did not err in awarding interest on the conversion claim because defendants were liable for interest pursuant to Civil Code section 3336.
We decline defendants' invitation to adopt a rule applying a comparative fault analysis to the intentional tort claims in this case. Because the issue was not raised in the trial court and no jury instructions were requested, the contention has been waived on appeal. (See Heiner v. Kmart Corp. (2000) 84 Cal.App.4th 335, 348-349; see also Pool v. City of Oakland (1986) 42 Cal.3d 1051, 1065-1066.) Nevertheless, courts have consistently rejected the concept that an intentional actor can rely on someone else's negligence to shift responsibility for his or her own intentional misconduct. (See Thomas v. Duggins Constr. Co., Inc. (2006) 139 Cal.App.4th 1105, 1112-1113 [comparative fault principals are inapplicable to intentional torts]; Allen v. Sundean (1982) 137 Cal.App.3d 216, 226-227 [no authority supports the extension of comparative fault principles to intentional torts].) The rationale of this rule was set forth in Heiner v. Kmart Corp., supra, 84 Cal.App.4th at page 349 as follows: "`Contributory negligence never has been considered a good defense to an intentional tort such ..., and it would likewise appear contrary to sound policy to reduce a plaintiff's damages under comparative fault for his "negligence" in encountering the defendant's deliberately inflicted harm.' [Citations.]" (Accord Thomas v. Duggins Constr. Co., Inc., supra, 139 Cal.App.4th at pp. 1112-1113.) More specifically, there is no basis to apply comparative fault principles for the business misrepresentations in this case. (See Godfrey v. Steinpress (1982) 128 Cal.App.3d 154, 176 [contributory negligence has no application to fraud by concealment]; Carroll v. Gava (1979) 98 Cal.App.3d 892, 896-897 [comparative fault principles do not apply to misrepresentations in business transactions].)
The judgment is affirmed. Plaintiffs, Yong Sik Kye and Hyon Ju Kye, are awarded their costs on appeal from defendants, EAA Capital, Inc., doing business as Cal Vest Realty, Eun Jip Kim, John Lee and David Kim.
We concur:
MOSK, ACTING P. J.
KRIEGLER, J.
