Jhaveri v. Teitelbaum, B182898 (Cal. App. 11/28/2007)
| Decision Date | 28 November 2007 |
| Docket Number | B182898 |
| Court | California Court of Appeals Court of Appeals |
| Parties | INDRA S. JHAVERI et al., Plaintiffs and Respondents, v. STEVEN TEITELBAUM et al., Defendants and Respondents. |
Appeal from a judgment of the Superior Court of Los Angeles County. No. BC 242306. William Highberger, Judge. Affirmed in part; reversed in part.
Pastor, Schiff & Summers, Michael J. Schiff; Benedon & Serlin, Gerald M. Serlin and Douglas G. Benedon for Defendants and Appellants.
Hornberger & Brewer, Michael A. Brewer, Nicholas W. Hornberger and Mathias D. MacIejewski for Plaintiffs and Respondents.
This is an appeal from a judgment after a jury unanimously found appellants Steve Teitelbaum and L.A. Coin Company, LLC (L.A. Coin Company) liable for breach of contract and fraud. In a bifurcated trial, the jury awarded Indra and Mary Jhaveri, doing business as Kant-Sar International,1 compensatory damages in the amount of $1,219,864.2 The jury awarded respondent punitive damages of an additional $1,016,554 against L.A. Coin Company and $2,033,108 against Teitelbaum. Appellants contend the jury's compensatory award is excessive, the punitive damages award must be reversed due to insufficient evidence of appellants' financial condition and the trial court incorrectly calculated prejudgment interest.
We reverse the judgment insofar as it awards prejudgment interest of 10 percent instead of 7 percent per annum on the tort portion of the compensatory award, modify the judgment to adjust the prejudgment interest and affirm the judgment as so modified.
Respondent is a wholesale jewelry merchant with many years of experience in the industry. Respondent was born in India where his family has been in the jewelry business for many generations. He resides with his family in Arizona, but bought, sold or traded with dealers all over the United States as well as overseas.
Appellant Teitelbaum has been the owner, general manager and member of L.A. Coin Company in its various forms since 1977. L.A. Coin Company is a coin dealer that has also dealt in jewelry since the early 1980s. In May 2000, appellant L.A. Coin Company was formed with appellant Teitelbaum, Brian Dubois, and Paul Wojdak as members and equal partners.3
In or about 1999, to facilitate a change to a more family-oriented lifestyle, respondent became interested in selling his entire inventory of diamonds and diamond jewelry. Respondent was aware he would not be able to command as high a price in selling the entire inventory as a lot than if he were to sell the diamonds individually. In November 1999, respondent visited L.A. Coin Company and showed his inventory to Teitelbaum, Dubois and Wojdak. Respondent saw that L.A. Coin Company had several showcases of white diamond rings, fancy colored diamond jewelry and other jewelry, including rings, earrings, necklaces and watches. Coins and bank notes were also on display. Dubois and Teitelbaum made a careful inspection of the diamond lot and made respondent a cash offer of $750,000 for his entire inventory. Respondent rejected the offer as too low.
Over the next two months, Teitelbaum and Dubois reconfirmed their interest in purchasing respondent's inventory. In order to renew negotiations, Teitelbaum and Dubois presented themselves as "solid players in the industry." As part of this characterization, they told respondent that Teitelbaum was an established financier to a Beverly Hills jeweler and owner of 1,000 apartment units in Las Vegas.
In early January 2000, respondent met again with Teitelbaum, Dubois and Wojdak at L.A. Coin Company to negotiate a sale. Respondent's inventory consisted of a total of 3,700 carats, comprising a variety of certified and uncertified white diamonds, colored diamonds, black diamonds and small diamonds called "melees." After inspecting the diamonds for several hours, Dubois and Teitelbaum reached an agreement with respondent to buy the entire lot for $1.1 million, to be paid over the course of seven months.4
Respondent drew up an invoice indicating the transaction date,5 sale price of $1.1 million for the 3,700-carat lot of diamonds and payment terms. Scheduled payments were to be made by checks ranging from $7,500 to $150,000 over the course of seven months. Teitelbaum signed the invoice and provided respondent with a series of 10 postdated checks, which were to be cashed throughout the next several months. Both Teitelbaum and Dubois made personal guarantees to respondent that the checks would be honored.
The deal fell apart almost immediately. Within two weeks, Teitelbaum began to pawn the $1.1 million of diamonds to a Beverly Hills pawnbroker for quick cash, netting L.A. Coin Company a $292,000 loan check in return for the merchandise. Appellants did not notify respondent they had pawned the diamonds, nor did respondent agree they could be pawned.
By the end of January 2000, respondent had received credits and payments from appellants totaling $190,000, roughly consistent with the payment schedule. Starting in late January 2000, however, checks provided respondent began to be dishonored. At first, Teitelbaum provided wire transfers as replacements for those checks.
In the summer of 2000, Teitelbaum told respondent he had received a substantial settlement from a lawsuit. As proof of the settlement, Teitelbaum bought and paid for additional diamonds worth $74,710 with two checks, both of which cleared the bank. He told respondent he would pay for everything plus interest once he received money from another settlement. After regaining respondent's confidence with the checks, Teitelbaum and Dubois induced respondent to part with more jewelry, including certified diamonds, pearls and a Rolex watch, of a total value of $200,449.
Despite Teitelbaum's and Dubois' assurances of payment, respondent was given only more checks with nonsufficient funds or on which Teitelbaum placed stop payment orders.
In September 2000, through his personal relationship with the pawnbroker, respondent learned for the first time that the diamonds had been pawned. At or about that time, the pawnbroker foreclosed upon all of the diamonds for appellants' failure to make required loan payments.
The transactions and items left unpaid totaled $1,016,554.
Appellants' continued practice of placing stop payments on the checks, providing checks with insufficient funds and providing checks on accounts that could not be found also caused great strain on respondent's business and personal finances. Respondent was forced to sell other assets, twice refinance his home and abandon needed home improvements; he lost credibility among his peers, and his business lost significant value.
Respondent filed the present action against Teitelbaum, L.A. Coin Company, Dubois and others. The complaint included causes of action for breach of contract and fraud. L.A. Coin Company responded with a cross-complaint against respondent alleging breach of contract and fraud.
At trial, the court bifurcated the punitive damages issue from the issues of liability and compensatory damages. After the first phase of trial, the jury found that Teitelbaum, L.A. Coin Company and Dubois were liable to respondent for breach of contract and fraud and that respondent was not liable on L.A. Coin Company's cross-complaint. The jury found respondent's damages on the breach of contract claim to be $ 1,016,554 and on the fraud claim to be $1,219,864. The jury further determined Teitelbaum, L.A. Coin Company and Dubois had acted with malice, oppression and fraud.
Following the second phase of the bifurcated trial, the jury awarded punitive damages of $2,033,108 against Teitelbaum, $1,016,554 against L.A. Coin Company and $1,016,554 against Dubois.
The court entered a judgment for compensatory damages in the larger amount of $1,219,864 and for punitive damages consistent with the verdict. The court denied appellants' motions for new trial and to vacate the judgment.
Dubois appealed from the judgment, and appellants Teitelbaum and L.A. Coin Company timely cross-appealed. We dismissed Dubois' appeal after he failed to file an opening brief, and the judgment against him is final.
Appellants contend the jury's compensatory damages award of $ 1,219,864 for fraud cannot stand because it is not supported by the evidence.6
Appellants argue the parties stipulated at trial that exhibit 122 established L.A. Coin Company's outstanding balance was $ 1,019,554 and that such figure is the maximum amount the jury could award as compensatory damages. Appellants give too much significance to respondent's stipulation.
Outside the jury's presence, the parties stipulated only that exhibit 122 was "an accurate reflection of the things that they purport to reflect." Respondent's counsel explained to the court the parties were in agreement that exhibit 122 represented "a list of the amounts or things that we have given" and of "what we got back in return" for the merchandise given to appellants. Counsel informed the court that Defense counsel agreed with that statement, with the proviso that there was a $3,000 credit not reflected in exhibit 122.
When trial resumed before the jury, the trial court told the jury: Respondent's counsel then offered the stipulation that exhibit 122 "is an accurate accounting, except for one matter that [appellants] are going to bring up later on." (Italics added.) Appellants' counsel accepted the stipulation, with the clarification that "there is a credit that we'll discuss with witnesses that is not...
To continue reading
Request your trial