Chen v. Sutherland CA6

Filed 3/19/14 Chen v. Sutherland CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

XUEMEI CHEN et al., H037956
(Santa Clara County
Plaintiffs and Respondents, Super. Ct. No. CV133580)

v.

RICHARD R. SUTHERLAND,

Defendant, Cross-complainant and
Appellant;

THOMAS E. FRANCIS,

Defendant, Cross-defendant and
Respondent.

I. INTRODUCTION
Respondents Xuemei Chen, Cheong Ang, and Richard C. Conroy invested a total
of $474,000 in an investment scheme involving the purchase and sale of heavy
equipment. After losing nearly all of their money, respondents filed a lawsuit against
Katherine K. Sutherland, M.D. (Katherine)1 and her husband, appellant Richard R.
Sutherland (Richard), who respondents believed had induced them to participate in the

1
We will hereafter refer to appellant Katherine Sutherland and her husband,
Richard Sutherland, by their first names for purposes of clarity and meaning no
disrespect.
fraudulent investment scheme and were therefore responsible for their losses under
contract and tort theories of liability. Respondents also named as a defendant Thomas E.
Francis, M.D., who was involved in the fraudulent investment scheme.
During the three-week jury trial, Richard dismissed his cross-complaint against
Francis, in which he had sought indemnification, apportionment of fault, declaratory
relief, and damages. The jury found that Katherine had no liability, that Richard and
Francis were partners, and that Richard and Francis were liable to respondents for
compensatory damages. The judgment entered in December 2011 awarded respondents
Chen and Ang the total amount of $546,394.66 and respondent Conroy the total amount
of $116,103.29.
On appeal, Richard contends that the judgment should be reversed because the
trial court erred in (1) admitting evidence of Richard’s dismissed felony convictions in
violation of Penal Code section 1203.4 and Evidence Code section 788, subdivision (c);
(2) refusing the jury instructions proposed by Richard on causation, agency, and
partnership; and (3) denying Richard’s Code of Civil Procedure section 473,
subdivision (b) motion for relief from his voluntary dismissal of his cross-complaint for
indemnification against Francis. For the reasons stated below, we find no merit in
Richard’s contentions and therefore we will affirm the judgment.
II. FACTUAL AND PROCEDURAL BACKGROUND
A. The Pleadings
In 2009, plaintiffs Chen, Ang, and Conroy filed a complaint against defendants
Richard, Katherine, and Francis.2 The parties’ trial briefs indicate that the causes of
action that remained for trial against all three defendants were fraud and deceit, negligent

2
The complaint also named several other defendants who were not involved in
the trial and are not involved in the present appeal.
2
misrepresentation, unjust enrichment, and rescission. As against Richard and Francis
only, causes of action remained for breach of contract and common count for money lent.
Richard filed a cross-complaint against Francis in 2010. By the time of trial, the
operative pleading was the second amended cross-complaint,3 which sought
indemnification, apportionment of fault, and declaratory relief, and also stated causes of
action for breach of contract and rescission.
B. Trial Evidence
The trial on the complaint and the second amended cross-complaint began on
November 15, 2011. The following is a summary of the witness testimony and other
evidence presented at trial.4
1. Chen and Ang Meet the Sutherlands
In March 2008, Chen, a data analyst, and Ang, a software engineer, moved to a
house in Los Altos.5 Richard and Katherine lived in a house across the street. Chen and
Ang gave a housewarming party in May 2008 where they met their neighbors Richard
and Katherine for the first time. During the housewarming party, Richard told Chen that
“he was retired from [l]aw.” Richard had actually been suspended from the practice of
law by the California State Bar after suffering felony convictions for perjury, offering a
forged document as genuine, and falsifying documents to be used as evidence.6 Richard
ultimately resigned from the California State Bar in 1997 with disciplinary charges

3
The second amended cross-complaint was not included in the record on appeal.
4
The record reflects that the trial testimony included the playing of the video
deposition of Michael Lee Weaver, but the deposition was not transcribed and was not
included in the record on appeal.
5
Chen and Ang were married in August 2010.
6
This court affirmed the judgment on Richard’s felony convictions in People v.
Sutherland (Feb. 8, 1999, H016872 [nonpub. opn.].)
3
pending that arose in a different matter. However, Richard understood that a 2001 court
order had set aside his convictions after the trial court granted his application under Penal
Code section 1203.4. He had also received legal advice that the court order meant he had
no obligation to reveal that he had once been convicted of felony offenses.
Chen next met Richard and Katherine at a neighborhood block party on July 4,
2008. During her conversation with Richard, Chen asked him what he had been doing
after retiring from law. Richard replied that he “had been doing some investments.”
Chen was interested because their “investments in the stock market were really bad.”
Richard responded that since he did not take any risks at his age he was investing in low
risk investments, including viaticals7 and “the Heavy Equipment Arbitrage Program.”8
2. The Heavy Equipment Arbitrage Program
On July 12, 2008, Chen received an email from Richard regarding the heavy
equipment arbitrage program. Chen forwarded the email to Ang. One paragraph in the
email was entitled “Executive Summary—Jupiter Heavy Equipment Arbitrage Partners.”
Among other things, the Executive Summary stated that its principals were Richard and
Francis and described Richard as a graduate of Harvard Law School who had 25 years of
experience as a “successful business and real estate litigator.” This description was
intended by Richard “to create a sense of trust in [his] education, [his] business ability
and [his] training.”
The Executive Summary also included an explanation of the heavy equipment
arbitrage program: “Large construction projects outside the United States are proceeding

7
“A viatical is a sale of the life insurance policy of a terminally ill person to an
investor so that the insured has money for support prior to death. When the insured dies,
the investor receives a portion, or all, of the beneficiary proceeds of the policy.” (People
v. Cole (2007) 156 Cal.App.4th 452, 466, fn. 15.)
8
Arbitrage transactions involve “[t]he simultaneous buying and selling of a given
commodity to capitalize on a price differential.” (People v. Vineberg (1981)
125 Cal.App.3d 127, 132-133.)
4
at a record pace, whether one is talking about China, India, Dubai, other parts of the
Middle East or South and Central America. The demand for heavy equipment to perform
these tasks is virtually unprecedented. Domestic but primarily foreign buyers search the
globe for new and used heavy equipment to meet their needs. Generally, the cost of a
used piece of machinery normally runs between $100,000 and $500,000 per piece. . . .
[¶] . . . What happens is that an order for a particular machine, new or used, comes into
our joint venture broker-dealer partner. Our broker-dealer partner, with order in hand,
then searches his sources in the United States for a machine with which to fill the order.
With the purchase order already in hand, our broker-dealer partner purchases the
equipment for immediate resale to the foreign buyer. The profit is the difference between
the purchase price and the resale price of the equipment, realized when payment is
received by the broker dealer. . . . [¶] The equipment is not shipped to the foreign buyer
(or domestic buyer as the case may sometimes be), unless and until full payment therefor
has been received by the broker-dealer partner and the funds deposited into a bank trust
account.”
The Executive Summary also described the risk of investing in the heavy
equipment arbitrage program: “There is a possibility that although an order has been
placed for a particular piece of heavy equipment with the broker-dealer has subsequently
used funds from Jupiter to purchase the equipment [sic], the buyer may default on the
purchase. In such an event, the broker-dealer would then set about to find a subsequent
buyer for the piece of machinery. The price at which the broker-dealer sells the
equipment might be at a lower price or [it] may take longer to find a buyer. . . . It is an
extremely rare event for an order to be placed with the broker-dealer and to have the
buyer default on the purchase after the broker-dealer had acquired the ordered piece of
equipment. There has been no default on any payment from the broker-dealer in four
years of experience. . . . The principal is in essence secured by the machinery which is
owned free and clear of any liens and encumbrances.”
5
 Richard and Francis intentionally omitted the name of the Georgia broker-dealer,
Wendell Spell, from the Executive Summary.
3. The July 13, 2008 Meeting with the Sutherlands
On July 13, 2008, Chen and Ang met with Richard and Katherine to discuss
investing in viaticals and the heavy equipment arbitrage program.9 The meeting took
place in the Sutherlands’ home. With regard to the heavy equipment arbitrage program,
Richard explained that Francis, who was described in the Executive Summary as a
principal, was located in Georgia, had been a friend of the Sutherlands for 30 years, and
had introduced the heavy equipment arbitrage program to them. Richard also explained
how the program worked, stating that “[t]he machine ha[d] been sold before it was
purchased” and the Georgia broker-dealer needed investors rather than bank credit to
purchase the heavy equipment due to the speed of the transactions. Jupiter Heavy
Equipment Arbitrage Partners was a business that Richard and Francis were starting
where investors would receive a fixed rate of 2 percent on their investments. Richard
also informed Chen and Ang that before the end of July 2008, when the Jupiter business
would start, he and Francis were offering “ad hoc deals” with a much higher return than
2 percent.
As to risk, Richard stated during the July 13, 2008 meeting with Chen and Ang
that their money invested in heavy equipment would be safe because Francis maintained
a separate trust account for investors’ funds. Chen recalled that Richard also stated that
the risk of investing in the heavy equipment arbitrage program was “very minimal,
almost no risk, because the machine has been presold and that the worst case scenario is
that the buyer disappeared or doesn’t want to buy it anymore and we will be stuck with

9
The parties disagreed during their trial testimony as to whether Katherine was
present when Richard was describing the heavy equipment arbitrage program during the
July 13, 2008 meeting. Katherine testified that she had left the room before that
discussion took place; Chen recalled that Katherine was present.
6
the piece of machine. Then we just have to find another buyer to sell it.” Richard told
Chen and Ang that he and Katherine had “invested a lot of money in the business as
well,” and that the Sutherlands had done “due diligence” by traveling to Georgia where
they met Spell (the broker-dealer) and “saw the machines on the lot.” By the time of the
July 13, 2008 meeting, the investments that Richard and Katherine had made in the heavy
equipment arbitrage program exceeded $700,000.
Chen trusted Richard and she and Ang left the meeting “feeling very lucky that
[they could] be included in this kind of private opportunity. . . . We just felt like they
have done all the work, all the preparation work and we kind of just to enjoy the ride or
enjoy the benefits.” They told Richard to let them know if anything came up.
4. Chen, Ang, and Conroy Decide to Invest
After their meeting, Richard sent Chen and Ang an email dated July 14, 2008, in
which he stated that he had “left the stock market in 2000.” Richard also stated: “So,
now I keep it simple. I know who the players are. I mean, I really do know them. I
know what the process is. I understand perfectly how the . . . heavy equipment
operations work. I know and understand what the risks are, and they are among the least
of anything I know, even banks. . . . [¶] [I] have a lot of family and friends who have
invested with [Katherine] and me. But none have more money invested in these
programs than do [Katherine] and I. We take these responsibilities very, very seriously.
We look forward to helping you build a great fund to put your children through college
and to live a pretty darned stress-free existence.”
In another email dated July 14, 2008, Richard advised Chen that he had just gotten
a call from his “partner, Tom [Francis], back in Georgia. Two orders for machines
costing $87,000 have just come in. You can have one or both. The payout is 4.25% of
the $87,000 in four weeks.” Chen discussed the investment offer with Ang and with
Conroy, her ex-husband and friend. Richard telephoned Conroy and told him that he had
“checked out the operation” of the heavy equipment arbitrage program and that it “was a
7
partnership, it was low risk and that [his] money was safe.” After deciding that the heavy
equipment arbitrage program presented a good opportunity, Ang wired $87,000 to
Francis and received a bill of sale from Francis that was stamped by Spell. Conroy also
wired $87,000 to Francis and received a bill of sale from him.
The next investment opportunity was presented to Chen in Richard’s July 18, 2008
email, which stated: “There is now a $428,000 contract available that pays 4.5% in 5
weeks. Some others have already pitched in to buy the machine. If you have any interest
in coming in on the purchase of this machine, let me know and if so, how much?” Chen
and Ang decided to invest $100,000 to purchase a fraction of the machine. Richard then
sent Chen a memorandum dated July 18, 2008, in which he stated that in five weeks they
would be paid 4.5 percent on their $100,000 investment, and could elect to have the
principal returned to them or rolled over into another investment.
After making the $100,000 investment, Chen received a July 25, 2008 email from
Richard stating that there was “a $310,000 contract available” with a return of 3.25
percent to 3.75 percent, depending on the time of the payoff. Richard also stated in the
email, “Remember, the money isn’t simply ‘floating’ out there. It is always connected
directly to a specific machine. Also, if you have family or friends looking for a safe and
better place to put some money, we welcome referrals.”
Chen recalled that Richard periodically told her to give his name to family or
friends who were interested in doing “sound investments.” Richard also encouraged
Chen and Ang to invest more in the heavy equipment arbitrage program by taking out a
line of credit on their house. Richard and Francis profited on others’ investments in the
heavy equipment arbitrage program under the following arrangement: After the investor
was paid his or her profit on the deal (as determined by Spell), Spell and Francis split the
remaining gross profit and Francis, in turn, gave Richard one-half of Francis’s profit.
Richard’s role was to bring in the investors, present to them the deal offered by
Francis (including the availability of a machine, the cost, the profit, and the timeframe),
8
write memoranda confirming the investors’ purchases, and direct them to wire their
money to Francis, who would then provide the investor with the bill of sale he had
received from Spell. The investors’ funds “passed through” Francis’s checking account
and “went directly to Mr. Spell’s entities.” Francis did not inspect the equipment and had
no knowledge of the equipment’s purchasers or whether the purchasers actually existed.
Richard denied that he and Francis had ever formed a partnership. Francis acknowledged
that he and Richard occasionally referred to each other as partners.
In August 2008, Richard offered Chen and Ang another investment opportunity.
Specifically, Richard’s August 6, 2008 email offered them “10% on $900,000 (or a
portion thereof . . .), paid in 4 to 6 weeks.” Because Chen and Ang had not yet received
any return on their previous investments, they did not invest in that opportunity. They
had previously made a third investment of $200,000 for an interest in machines with a
price of $1.4 million. Richard confirmed the $200,000 investment in a memorandum
dated August 7, 2008. The memorandum also stated that Chen and Ang would be paid a
10 percent return in six weeks and could elect to roll the principal into a new investment
or have the principal returned. Richard advised them that they were responsible for
paying the wire transfer fees to Francis. However, Richard admitted during his trial
testimony that he never did anything to verify that the equipment that the investors were
buying actually existed or to acquaint himself with standard practices in the used heavy
equipment industry.
5. Standard Practices in the Used Heavy Equipment Industry
An expert on standard practices in the used heavy equipment industry, Jack
Thomson, testified on behalf of plaintiffs. Thomson is the president of Thomson
Equipment Company, which buys, sells, and rents used construction equipment.
Thomson founded the company in 1985 and at the time of trial was president of the
Independent Equipment Dealers Association.

9
 Thomson explained his process for purchasing a used piece of construction
equipment. First, if he is buying from a contractor, he needs to know the company name
and the nature of the business, since some industries are harder on equipment than others.
After determining the company name, Thomson performs a lien search, since, unlike a
motor vehicle, construction equipment does not have a title. If the piece of equipment
has a lien on it, Thomson has to pay off the lien.
Thomson is very careful when he purchases a piece of equipment at auction. He
would not buy the equipment without a thorough inspection and verification of the prior
owner, the usage, and the maintenance program. Thomson would also want to know the
number of hours on the hour meter, which indicates the total number of hours a piece of
equipment has run. Used construction equipment usually has a purchase price of
$150,000 to $200,000 and can cost as much as $60,000 to repair.
Most of the used construction equipment that Thomson purchases is for resale.
Sometimes it is purchased for resale to a specific buyer who needs a particular piece of
equipment for a construction job. If Thomson does not know the buyer, he will
investigate the buyer’s financial condition and prior jobs in the construction industry
before making the sale. In Thomson’s experience with international sales, the
transactions are handled through a freight forwarder in the United States who is sent a
certified bill of sale, a commercial invoice, and a power of attorney or letter stating that
the freight forwarder can act on the seller’s behalf. The bills of sale that Thomson
examined in this case could not have been used to document a foreign transaction since
the serial numbers did not match the equipment.
Thomson reviewed the bill of sale that was provided to Chen and Ang for their
$87,000 investment and noticed several discrepancies. The bill of sale included a VIN
number, although construction equipment has serial numbers rather than VIN numbers
since VIN numbers are for licensed vehicles such as cars. Also, the VIN number did not
correspond to the correct serial number for the heavy equipment described on the bill of
10
sale and the price was “way overstated.” Additional bills of sale that were provided to
Chen and Conroy for their heavy equipment investments had similar discrepancies.
6. Chen, Ang, and Conroy Fail to Receive the Promised Returns
Sometime in August 2008, when no profit or return of principal had been received
on the first investment made by Chen and Ang, Chen started asking Richard a lot of
questions. Richard forwarded her questions to Francis and Chen then began to
communicate directly with Francis regarding her concerns. Francis explained, in an
August 18, 2008 email to Chen, that their principal could be returned with 60 to 90 days
notice. Chen had thought that their principal would be automatically returned if they did
not elect to roll it over into another investment. In an August 21, 2008 email she asked
Francis how he could keep track of the principal and indicated it would be better to have
the principal returned.
Richard replied to Chen’s queries in an August 21, 2008 email, in which he asked
her to be patient since Francis was a full-time practicing physician and the person “ ‘on
the ground’ ” in Georgia. Chen understood that Richard and Francis were partners and
that Francis was the person who was in direct contact with Spell and took care of the
investment deals after the money was wired from California. In an August 27, 2008
email, Richard advised Chen that the machine she had bought with the initial $87,000
investment “exists and is sitting on a lot. It has a specific identification number. The
broker simply hasn’t received the money for it yet. You would be welcome to go to
where the machine is to inspect it.”
In September 2008 Chen received a profit of approximately $3,500 on the $87,000
investment and Conroy received a profit of $3,698.00 on his $87,000 investment. In an
October 12, 2008 email, Richard explained that one reason for the delay in receiving a
return on their other investments was that the machines had been sold to a Middle East
country during Ramadan. By October 17, 2008, Richard had contacted the county sheriff

11
and the FBI. Richard understood that Spell’s “theft” of the funds invested by Chen, Ang,
and Conroy took place after they made their investments.10
Chen, Ang, and Conroy never received any additional payment of profit or any
return of the principal they had invested in the heavy equipment arbitrage program. Chen
testified that if she had known about Richard’s criminal history, she would not have
entered into an investment with him. Richard, Katherine, and Francis assert that they
also lost money that they had invested in the heavy equipment arbitrage program.
C. Dismissal of Cross-Complaint
On the morning of December 5, 2011, the last day of trial testimony, Richard
voluntarily dismissed his cross-complaint against Francis. The next day, Richard’s
attorney requested relief from the voluntary dismissal of the cross-complaint under Code
of Civil Procedure section 473, subdivision (b) on the ground that he had mistakenly
dismissed Richard’s claim for indemnification against cross-defendant Francis. The trial
court denied Richard’s request for relief and the case proceeded to jury verdict.
D. Special Verdict and Judgment
The jury rendered its special verdict on December 9, 2011. The special verdict
form asked the jurors to make findings on whether defendants were partners and on
plaintiffs’ claims for breach of contract, negligent misrepresentation, concealment,
intentional misrepresentation, and economic damages. The jurors found that
(1) defendants Richard and Francis were partners; (2) Richard and Francis were liable for
breaching the contract for heavy equipment that they had entered into with plaintiffs;
(3) Richard was liable for negligent misrepresentation of an important fact to plaintiffs;
(4) Richard was liable for making a false representation of an important fact to plaintiffs

10
The complaint alleged that “[o]n October 16 and 18, 2008, [Richard] admitted
in emails to Chen that their broker-dealer partner had taken $14,000,000 in funds,
deserted his family and that the FBI was looking for him,” but no evidence was presented
at trial to support this allegation.
12
and either knowing that the representation was false or making the representation with a
reckless disregard for the truth; (5) the total economic loss of plaintiffs Chen and Ang
was $286,552; and (6) the total economic loss of plaintiff Conroy was $61,552.
The judgment entered on December 19, 2011, provided that plaintiffs would take
nothing by way of their complaint from defendant Katherine and that plaintiffs would
recover compensatory damages and prejudgment interest from defendants Richard and
Francis. Chen and Ang were awarded the total amount of $546,394.66 plus costs and
Conroy was awarded the total amount of $116,103.29 plus costs. Judgment was entered
in favor of cross-defendant Francis on Richard’s cross-complaint, pursuant to Richard’s
voluntary dismissal of the cross-complaint.
Plaintiffs subsequently filed a request for dismissal of the complaint as to
defendant Francis only and Francis’s dismissal was entered on January 31, 2012.
Richard filed a timely notice of appeal from the December 19, 2011 judgment.
III. DISCUSSION
A. Evidentiary Error
Richard’s first contention on appeal is that the trial court committed prejudicial
error in admitting evidence of his felony convictions because there is a reasonable
probability that, absent the error, the jury would have reached a more favorable result.
1. Evidence Admitted Regarding Richard’s Felony Convictions
The record reflects that Richard brought a motion in limine to exclude evidence of,
and any reference to, his felony convictions. He argued that his felony convictions had
been expunged under Penal Code section 1203.4 (hereafter, section 1203.4)11 pursuant to

11
Section 1203.4, subdivision (a)(1) provides in part: “In any case in which a
defendant has fulfilled the conditions of probation for the entire period of probation, or
has been discharged prior to the termination of the period of probation, or in any other
case in which a court, in its discretion and the interests of justice, determines that a
defendant should be granted the relief available under this section, the defendant shall, at
any time after the termination of the period of probation, if he or she is not then serving a
13
a trial court order filed on February 23, 2001, and therefore he had no duty to disclose his
prior convictions to plaintiffs. Richard also argued that his felony convictions were
inadmissible under Evidence Code section 788, subdivision (c),12 which prohibits an
attack on the credibility of the witness who has been convicted of a felony where the
accusatory pleading against the witness has been dismissed pursuant to section 1203.4.
The trial court denied Richard’s motion in limine, finding that the evidence of Richard’s
felony convictions was relevant in light of Richard’s representation of himself as a
successful retired attorney and was not unduly prejudicial under Evidence Code section
352.
The evidence admitted with regard to Richard’s felony convictions included the
the October 15, 1996 jury verdict finding Richard guilty of two counts of perjury, one

sentence for any offense, on probation for any offense, or charged with the commission
of any offense, be permitted by the court to withdraw his or her plea of guilty or plea of
nolo contendere and enter a plea of not guilty; or, if he or she has been convicted after a
plea of not guilty, the court shall set aside the verdict of guilty; and, in either case, the
court shall thereupon dismiss the accusations or information against the defendant and
except as noted below, he or she shall thereafter be released from all penalties and
disabilities resulting from the offense of which he or she has been convicted, except as
provided in Section 13555 of the Vehicle Code. . . . However, in any subsequent
prosecution of the defendant for any other offense, the prior conviction may be pleaded
and proved and shall have the same effect as if probation had not been granted or the
accusation or information dismissed. The order shall state, and the probationer shall be
informed, that the order does not relieve him or her of the obligation to disclose the
conviction in response to any direct question contained in any questionnaire or
application for public office, for licensure by any state or local agency, or for contracting
with the California State Lottery Commission.”
12
Evidence Code section 788, subdivision (c) provides: “For the purpose of
attacking the credibility of a witness, it may be shown by the examination of the witness
or by the record of the judgment that he has been convicted of a felony unless: [¶] . . .
[¶] The accusatory pleading against the witness has been dismissed under the provisions
of Penal Code Section 1203.4, but this exception does not apply to any criminal trial
where the witness is being prosecuted for a subsequent offense.”

14
count of offering a forged document as genuine, and one count of falsifying documents to
be used in evidence. The February 23, 2001 trial court order was also admitted into
evidence. The order states in part: “IT IS HEREBY ORDERED AS FOLLOWS: [¶]
The court enters a plea of not guilty on behalf of the defendant, RICHARD R.
SUTHERLAND, vacates the guilty verdict, [and] dismisses the complaint against him
pursuant to Penal Code section 1203.4.” Additionally, Richard testified that he had been
suspended from the practice of law by the California State Bar after suffering felony
convictions for perjury, offering a forged document as genuine, and falsifying documents
to be used as evidence.
During closing argument regarding plaintiffs’ claims of concealment and
intentional misrepresentation, plaintiffs’ attorney argued that Richard had misrepresented
that he was a successful retired lawyer and concealed the fact that he had lost his
entitlement to practice law due to his perjury convictions and his resignation from the
State Bar with disciplinary charges pending. Richard’s attorney responded during his
closing argument that Richard had successfully completed probation and his convictions
had been dismissed.
The trial court gave a special jury instruction regarding the felony convictions that
stated in part: “A record of Richard R. Sutherland’s felony convictions is in evidence.
After Richard Sutherland had completed his probation for the felony convictions, by
order filed February 23, 2001, the court entered its order granting Richard Sutherland’s
application as follows: ‘The court enters a plea of not guilty on behalf of the defendant,
Richard R. Sutherland, vacates the guilty verdict, dismisses the complaint against him
pursuant to Penal Code section 1203.4.’ Thereafter, with an exception not applicable in
this case, he was released from all penalties and disabilities resulting from the offenses
for which he was convicted. [¶] As used in that section, ‘penalties and disabilities’ have
reference to criminal penalties and disabilities or to matters of a kindred nature. The
statute does not purport to ‘expunge’ the prior convictions. You may consider the
15
convictions, along with all the evidence in the case, in determining the issues presented
for your consideration.”
2. The Parties’ Contentions
According to Richard, the trial court erred in admitting evidence of his felony
convictions because the court’s interpretation of section 1203.4 would require “a
rehabilitated defendant” to include information about his or her dismissed felony
conviction in a sales presentation in order not to mislead a prospective business contact
about the rehabilitated defendant’s character or standing in the community. Absent the
court’s evidentiary error, Richard argues, “the jury would have found this case to be just
exactly what it was: the cumulative error of a group of otherwise sophisticated, well
educated, affluent individuals who all thought they had discovered the exception to the
rule that ‘If something seems too good to be true, it probably is.’ ”
Richard further argues that the trial court committed reversible error because the
court instructed the jurors that they could consider the felony convictions in determining
the issues presented for their consideration, which allowed the jurors to improperly
consider the convictions on the issue of Richard’s credibility in violation of Evidence
Code section 788, subdivision (c).
Plaintiffs respond that the trial court correctly determined that Richard’s felony
convictions were not expunged under section 1203.4 and could be used against him in
certain circumstances beyond those specifically enumerated in the statute. According to
plaintiffs, section 1203.4 cannot be construed to give Richard “a license to affirmatively
misrepresent his professional status in the course of a prospectus for a financial
investment.” Plaintiffs explain that the evidence of Richard’s felony convictions was
properly offered to prove the falsity of Richard’s representations that he was a successful
attorney who had retired from the practice of law. They also emphasize that the trial
court did not expressly instruct the jurors that they could consider Richard’s convictions
on the issue of his credibility. Even assuming that the jurors had not been informed of
16
Richard’s felony convictions, plaintiffs argue, there was ample evidence to show that
Richard made false or grossly misleading representations about the purchase of heavy
equipment.
3. Section 1203.4
Section 1203.4 “permits a felon who has completed probation to apply to have the
felony conviction dismissed. ‘A grant of relief under section 1203.4 is intended to
reward an individual who successfully completes probation by mitigating some of the
consequences of his [or her] conviction and, with a few exceptions, to restore him [or
her] to his [or her] former status in society to the extent the Legislature has power to do
so [citations].’ [Citation.]” (Sanders v. Walsh (2013) 219 Cal.App.4th 855, 872.) With
certain exceptions not applicable here, Evidence Code section 788, subdivision (c)
prohibits the admission of a felony conviction dismissed under section 1203.4 for the
purpose of attacking the credibility of a witness. (See ibid.) It also has been held that
dismissal of a felony conviction under section 1203.4 enables a defendant “to ‘truthfully
represent to friends, acquaintances and private sector employers that he has no
conviction.’ [Citation.]” (People v. Arata (2007) 151 Cal.App.4th 778, 788 (Arata); but
see People v. Holman (2013) 214 Cal.App.4th 1438, 1465 (Holman) [statement in Arata
that probationer who obtains relief under section 1203.4 may truthfully represent he or
she has no conviction is dictum and there is no direct holding to support it]; see also
People v. Guillen (2013) 218 Cal.App.4th 975, 998 [“dictum in Arata may overstate the
case somewhat”].)
However, “[s]ection 1203.4 does not, properly speaking, ‘expunge’ the prior
conviction. The statute does not purport to render the conviction a legal nullity. Instead
it provides that, except as elsewhere stated, the defendant is ‘released from all penalties
and disabilities resulting from the offense.’ The limitations on this relief are numerous
and substantial . . . .” (People v. Frawley (2000) 82 Cal.App.4th 784, 791; see also

17
Holman, supra, 214 Cal.App.4th at p. 1463 [section 1203.4 does not expunge the
conviction or render the conviction a legal nullity].)
4. Analysis
We will resolve Richard’s claim of evidentiary error under the applicable standard
of review, as set forth in this court’s decision in Shaw v. County of Santa Cruz (2008)
170 Cal.App.4th 229, 281: “We review a trial court’s evidentiary rulings for abuse of
discretion. [Citation.] This is particularly so with respect to rulings that turn on the
relevance of the proferred evidence. [Citation.] This standard is not met by merely
arguing that a different ruling would have been better. Discretion is abused only when in
its exercise, the trial court ‘exceeds the bounds of reason, all of the circumstances before
it being considered.’ [Citation.] There must be a showing of a clear case of abuse and
miscarriage of justice in order to warrant a reversal. [Citation.] A trial court will abuse
its discretion by action that is arbitrary or ‘ “that transgresses the confines of the
applicable principles of law.” ’ [Citations.] In appeals challenging discretionary trial
court rulings, it is the appellant’s burden to establish an abuse of discretion. [Citations.]”
The California Supreme Court has instructed that “[t]he phrase ‘miscarriage of
justice’ has a settled meaning in our law, having been explained in the seminal case of
People v. Watson (1956) 46 Cal.2d 818 []. Thus, ‘a “miscarriage of justice” should be
declared only when the court, “after an examination of the entire cause, including the
evidence,” is of the “opinion” that it is reasonably probable that a result more favorable to
the appealing party would have been reached in the absence of the error.’ [Citation.] ‘We
have made clear that a “probability” in this context does not mean more likely than not,
but merely a reasonable chance, more than an abstract possibility.’ [Citation.]” (Cassim
v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 800 (Cassim).)
The parties have not directed us to any legal authorities that address the
admissibility of a defendant’s felony convictions in a civil jury trial, for a purpose other
than attacking witness credibility, where the convictions have been dismissed pursuant to
18
section 1203.4. Under the applicable standard of review, however, we need not
determine whether the trial court erred in ruling that neither section 1203.4 nor Evidence
Code section 788, subdivision (c) barred the admission of Richard’s felony convictions at
the jury trial in the present case. Even assuming that the trial court erred in admitting the
evidence regarding Richard’s felony convictions, we must determine whether it is
reasonably probable that Richard would have achieved a more favorable result in the
absence of that evidence, “[e]xamining the entire case, including the evidence adduced,
the instructions delivered to the jury, and the entirety of [plaintiffs’] argument.” (See
Cassim, supra, 33 Cal.4th at p. 802.)13
Having carefully reviewed the record, we are convinced that it is not reasonably
probable that Richard would have achieved a more favorable result at trial in the absence
of the evidence regarding his felony convictions. (See Cassim, supra, 33 Cal.4th at p.
802.) Most significantly, we note that Richard testified without objection that he had
resigned from the California State Bar in 1997 with disciplinary charges pending.
Richard also admitted in his testimony that (1) he had represented to plaintiffs that he was
a retired attorney; (2) stated in the Executive Summary for the heavy equipment arbitrage
program that he provided to plaintiffs that he had a 25-year career as a successful real
estate and business litigator; and (3) admitted that this description was intended “to create
a sense of trust in [his] education, [his] business ability and [his] training.” Therefore,
even if the evidence of Richard’s felony convictions had been excluded, there was
evidence to show that Richard had intentionally misrepresented that he was a successful
retired attorney in order to gain plaintiffs’ trust, when the truth was that he ceased to

13
At oral argument, Richard emphasized this court’s decision in Service by
Medallion, Inc. v. Clorox (1996) 44 Cal.App.4th 1807 as supporting his contention that
admission of his felony convictions was error because the felony convictions were not
relevant to the intrinsic merits of the heavy equipment investments. Since our analysis
assumes, without deciding, that admission of the felony convictions was error, we need
not further address this contention.
19
practice law in 1997 because he had resigned from the California State Bar with
disciplinary charges pending.
Moreover, we agree with plaintiffs that ample evidence apart from Richard’s
felony convictions was presented with regard to his credibility and the misrepresentations
he had made with respect to investing in the heavy equipment arbitrage program. For
example, Richard encouraged Chen and Ang to invest in the heavy equipment arbitrage
program in an email dated July 14, 2008, in which he stated: “I know who the players
are. I mean, I really do know them. I know what the process is. I understand perfectly
how the . . . heavy equipment operations work. I know and understand what the risks are,
and they are among the least of anything I know, even banks.” Then, in a July 25, 2008
email, Richard told Chen that “the money isn’t simply ‘floating’ out there. It is always
connected directly to a specific machine.” Similarly, in an August 27, 2008 email,
Richard advised a concerned Chen that the machine she had bought with the initial
$87,000 investment “exists and is sitting on a lot. It has a specific identification number.
The broker simply hasn’t received the money for it yet. You would be welcome to go to
where the machine is to inspect it.”
In his trial testimony, Richard admitted—contrary to what he had been telling
Chen and Ang in the above emails—that he had done nothing to verify that the
equipment that the investors were buying actually existed and that he had also done
nothing to acquaint himself with standard practices in the used heavy equipment industry.
Based on this evidence alone, the jurors could reasonably find that Richard lacked
credibility. The jurors could also reasonably determine from this evidence that Richard
had intentionally, negligently, or with a reckless disregard of the truth made
misrepresentations to plaintiffs about important facts concerning the heavy equipment
arbitrage program.
Accordingly, we find no merit in Richard’s contention that the trial court
committed reversible error in admitting the evidence of his felony convictions, since it is
20
not reasonably probable that he would have achieved a more favorable result at trial in
the absence of that evidence. (See Cassim, supra, 33 Cal.4th at p. 802.)
B. Instructional Error
Richard’s second contention on appeal is that the trial court erred in refusing the
jury instructions that he proposed on causation, agency, and partnership. We will address
the applicable standard of review before turning to each of the three types of instructional
error claimed by Richard.
1. Standard of Review
“A party is entitled upon request to correct, nonargumentative instructions on
every theory of the case advanced by him [or her] which is supported by substantial
evidence. The trial court may not force the litigant to rely on abstract generalities, but
must instruct in specific terms that relate the party’s theory to the particular case.
[Citations.]” (Soule v. General Motors Corp. (1994) 8 Cal.4th 548, 572 (Soule).)
However, “[t]he trial court is not required to give every instruction offered by a litigant.
[Citation.] Irrelevant, confusing, incomplete or misleading instructions need not be
given. [Citations.]” (Harris v. Oaks Shopping Center (1999) 70 Cal.App.4th 206, 209.)
“ ‘The propriety of jury instructions is a question of law that we review de novo.
[Citation.]’ [Citation.] When the contention on appeal is that the trial court failed to give
a requested instruction, we review the record in the light most favorable to the party
proposing the instruction to determine whether it was warranted by substantial evidence.
[Citation.]” (Alamo v. Practice Management Information Corp. (2013) 219 Cal.App.4th
466, 475 (Alamo).)
Where the trial court has committed instructional error, it is well established that
“[a] judgment may not be reversed on appeal, even for error involving ‘misdirection of
the jury,’ unless ‘after an examination of the entire cause, including the evidence,’ it
appears the error caused a ‘miscarriage of justice.’ (Cal. Const., art. VI, § 13.) When the
error is one of state law only, it generally does not warrant reversal unless there is a
21
reasonable probability that in the absence of the error, a result more favorable to the
appealing party would have been reached. [Citation] [¶] Thus, when the jury receives
an improper instruction in a civil case, prejudice will generally be found only ‘ “[w]here
it seems probable that the jury’s verdict may have been based on the erroneous
instruction . . . . ” ’ [Citations] That assessment, in turn, requires evaluation of several
factors, including the evidence, counsel’s arguments, the effect of other instructions, and
any indication by the jury itself that it was misled. [Citation.]” (Soule, supra, 8 Cal.4th
at p. 574.)
2. Instructional Error—Causation
Richard contends that the trial court erred in refusing three jury instructions on
causation that he requested, including modified versions of Judicial Council of California
Civil Jury Instructions (CACI) No. 430 and CACI No. 433, as well as a special
instruction on contract damages based on Civil Code section 3300.14
Background
As requested by Richard, modified CACI No. 430 stated: “A substantial factor in
causing harm is a factor that a reasonable person would consider to have contributed to
the harm. It must be more than a remote or trivial factor. It does not have to be the only
cause of the harm. [¶] Conduct is not a substantial factor in causing harm if the same
harm would have occurred without that conduct.”
Modified CACI No. 433, as requested by Richard, stated: “Defendant, Richard
Sutherland, claims that he is not responsible for plaintiffs’ harm because of the later
criminal conduct of Wendell Spell. Defendant, Richard Sutherland, is not responsible

14
Civil Code section 3300 states: “For the breach of an obligation arising from
contract, the measure of damages, except where otherwise expressly provided by this
code, is the amount which will compensate the party aggrieved for all the detriment
proximately caused thereby, or which, in the ordinary course of things, would be likely to
result therefrom.”

22
[for] plaintiffs’ harm if defendant proves both of the following: [¶] 1. That the criminal
conduct of Wendell Spell happened after the conduct of defendant, Richard Sutherland;
and [¶] 2. That defendant, Richard Sutherland, did not know and could not have
reasonably foreseen that another person would be likely to take advantage of the situation
created by defendant’s conduct to commit this type of act.”
The special jury instruction based on Civil Code section 3300 that Richard
requested stated: “In a contract action, the damages recoverable by an aggrieved party
are those proximately caused by the breach.”
The trial court stated on the record that “[t]he Court does not propose to give
[CACI No.] 430 or [CACI No.] 433 because the details of the instructions, including
issues of causation and reliance and the like are both completely and adequately covered
in the CACI instructions on fraud and involvement.” In a handwritten note on the
proposed jury instruction based on Civil Code section 3300 the court similarly stated:
“Damages instructions were adequately covered in other instructions.”
The Parties’ Contentions
We understand Richard to argue that the trial court’s refusal to give the
instructions he requested on causation improperly prevented the jurors from considering
his defense theory that “he was not responsible for Plaintiffs’ harm because of the later
criminal conduct of Wendell Spell.”
Richard contends that his argument is supported by juror question No. 1, which
stated: “Given a vote of ‘yes’ on [special verdict question No.] 16 [Was plaintiff’s or
plaintiffs’ reliance on any of defendant’s or defendants’ representation(s) a substantial
factor in causing harm to each plaintiff?] as harmed. In [special verdict question No.] 17
[if your answer to question No. 16 is yes, then answer question No. 17 (What are
plaintiffs’ damages?)], is an amount of greater than zero required?” The trial court
answered: “Harm in an economic sense is not zero or nothing.” According to Richard,
juror question No.1 shows that the jurors “thought it was possible . . . that the economic
23
harm to Plaintiffs was due to other factors (such as, perhaps, Wendell Spell’s criminal
activity.”
Plaintiffs argue to the contrary that the trial court properly refused the CACI
No. 433 instruction requested by Richard because there were no facts or circumstances to
show an unforeseeable, intervening cause that would “cut off” Richard’s liability.
Plaintiffs also argue there was no need to give an additional instruction defining
“substantial factor,” such as the version of CACI No. 430 proposed by Richard, because
the special verdict forms expressly required the jurors to find that defendants’ conduct
was a substantial factor in causing plaintiffs’ harm before liability could attach for
negligent and intentional misrepresentation. Additionally, plaintiffs argue the evidence
was clear that Richard’s misrepresentations “played a significant role in inducing
plaintiffs to purchase the equipment.”
Analysis
It has been held that “[c]riminal conduct which causes injury will ordinarily be
deemed the proximate cause of an injury, superseding any prior negligence which might
otherwise be deemed a contributing cause. [Citation.] However, ‘[i]f the likelihood that
a third person may act in a particular manner is the hazard or one of the hazards which
makes the actor negligent, such an act whether innocent, negligent, intentionally tortious
or criminal does not prevent the actor from being liable for harm caused thereby.’
[Citations.]” (Koepke v. Loo (1993) 18 Cal.App.4th 1444, 1449 (Koepke).)
Accordingly, we have reviewed the record in the light most favorable to Richard
in order to determine whether the trial court erred because the instructions requested by
Richard were warranted by substantial evidence that Spell’s criminal conduct caused
plaintiffs’ harm. (See Alamo, supra, 219 Cal.App.4th at pp. 475-476.) We find that the
evidence is insufficient. The only showing that Richard made regarding Spell’s alleged
criminal conduct was in his trial testimony, as set forth in the following colloquy:

24
 “[RICHARD’S ATTORNEY]: To your knowledge, did Mr. Spell’s theft of funds
that you deposited with Tom Francis take place after you made those deposits with Dr.
Francis?
“[RICHARD]: It took place after I sent the money.
“[RICHARD’S ATTORNEY]: Likewise, is it your understanding that Mr. Spell’s
theft of funds, specifically the plaintiffs’ funds in this case, took place after the Plaintiffs
had made their investments?
“[RICHARD]: Yes.”
It is axiomatic that the attorney’s questions are not evidence. (Evid. Code § 140.)
It is also axiomatic that “the testimony of a witness concerning a particular matter is
inadmissible unless he [or she] has personal knowledge of the matter.” (Evid. Code,
§ 702, subd. (a); see Heater v. Southwood Psychiatric Center (1996) 42 Cal.App.4th
1068, 1074, fn. 4.) In the absence of any indication that Richard’s testimony regarding
Spell’s theft was based on personal knowledge rather than his “understanding,” there was
no evidence to show that Spell had stolen the funds that plaintiffs had invested in the
heavy equipment arbitrage program. The instructions proposed by Richard on substantial
factor and superseding cause were not warranted because there was not substantial
evidence for the jurors to find that Spell had committed criminal conduct that was the
proximate cause of plaintiffs’ harm. (See Koepke, supra, 18 Cal.App.4th at pp. 1449-
1450.) Moreover, “it is improper to give an instruction that lacks support in the evidence,
even if the instruction correctly states the law [citation].” (Hart v. Browne (1980)
103 Cal.App.3d 947, 965.)
We also find no merit in Richard’s claim that the trial court erred in refusing his
proposed special instruction that was based on Civil Code section 3300. The special jury
instruction stated: “In a contract action, the damages recoverable by an aggrieved party
are those proximately caused by the breach.” As this court has stated, “A party is not
entitled to have the jury instructed in any particular fashion or phraseology, and may not
25
complain if the court correctly gives the substance of the applicable law. [Citation.]”
(Thompson Pacific Construction, Inc. v. City of Sunnyvale (2007) 155 Cal.App.4th 525,
553 (Thompson Pacific).)
The record reflects that the trial court instructed the jurors as follows with respect
to breach of contract: “To recover damages from defendants Richard Sutherland and
Thomas Francis, M.D. for breach of contract, plaintiffs must prove all of the following:
[¶] 1. That plaintiffs and defendants Richard Sutherland and Thomas Francis, M.D.
entered into a contract; [¶] 2. That plaintiffs did all, or substantially all, of the
significant things that the contract required them to do; [¶] 3. That all conditions
required by the contract for defendants Richard Sutherland and Thomas Francis, M.D.’s
performance have occurred; [¶] 4. That defendants Richard Sutherland and Thomas
Francis, M.D. failed to do something that the contract required them to do; and [¶]
5. That plaintiffs were harmed by that failure.”
We find that the trial court’s jury instruction on breach of contract correctly gave
the substance of the applicable law. (See Thompson Pacific, supra, 155 Cal.App.4th 525,
553.) “ ‘To be entitled to damages for breach of contract, a plaintiff must plead and
prove (1) a contract, (2) plaintiff’s performance or excuse for nonperformance,
(3) defendant’s breach, and (4) damage to plaintiff. [Citations.]’ [Citation.] Implicit in
the element of damage is that the defendant’s breach caused the plaintiff’s damage.”
(Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1352, italics added.) Thus,
the trial court did not err in refusing Richard’s proposed special instruction because “[i]t
is not error . . . to refuse to give an instruction requested by a party when the legal point is
covered adequately by the instructions that are given. [Citation.]” (Arato v. Avedon
(1993) 5 Cal.4th 1172, 1189, fn. 11.)
3. Instructional Error—Agency
Richard contends that the trial court erred in refusing the instructions that he
proposed on his defense theory “that he was an agent (or a ‘finder’) for his co-defendant,
26
respondent, Francis, and/or Wendell.” According to Richard, the trial court’s refusal
“completely foreclos[ed] a defense verdict on that theory.”
Background
The record reflects that Richard proposed several special instructions regarding
agency that the trial court refused, as follows: (1) “An agent who makes an untrue
statement to a third party based on false information provided by the principal is not
liable unless agent had notice that statement was false.”; (2) “Where the agent has
disclosed the name or names of the principals to the plaintiffs and the principals[’] names
appear on the contract, it is deemed that the plaintiffs intended to bind the principals and
not the agent.”; (3) “Where an agent’s conduct has resulted in mere economic loss and
not physical damage to person or property, the agent is not liable to third persons such as
plaintiffs in this case.”; (4) “Where the agent has disclosed the identity of the principal in
the contract, the principal and not the agent is held liable for any breach.”; and
(5) “Agreement to share in profits from sale of heavy machinery where there was no joint
ownership, joint liability or joint control of the business and where there was no sharing
of overhead expenses was one of agency and not partnership.”
The record on appeal does not indicate the trial court’s reasoning in refusing
Richard’s proposed special instructions on agency.
The Parties’ Contentions
Richard contends that the trial court committed instructional error in refusing to
instruct on agency because there was substantial evidence that he was the agent of
Francis. Richard points to the evidence of his arrangement with Francis, whereby Francis
told him “what investments were available, the cost, likely profit and timing,” the
investors sent their money directly to Francis, and Francis provided the investors with
bills of sale in Francis’s name only. Additionally, since plaintiffs only sought economic
loss, Richard argues that he could not be liable to third parties for breach of contract since
an agent is not liable for economic losses.
27
 Plaintiffs acknowledge that “[i]t is the law that an agent is not normally personally
liable on a claim for economic damages if the contract is in the name of the principal.”
They argue, however, that the only written contract documents in this case identified
Richard as a principal, since the memoranda documenting plaintiffs’ investments in the
heavy equipment arbitrage program were prepared by Richard on his letterhead and
signed by him.
Analysis
It is well established that “[a]n appellant must affirmatively demonstrate error
through reasoned argument, citation to the appellate record, and discussion of legal
authority. [Citations.] Accordingly, we cannot conclude that the refusal to give an
instruction was error absent an adequate showing that the proposed instruction was
proper. [Citation.]” (Bullock v. Philip Morris USA, Inc. (2008) 159 Cal.App.4th 655,
685 (Bullock.)
Richard has not met his burden to show that any of his five proposed special
instructions on agency were proper since he does not expressly address the propriety of
any of those instructions in his argument on appeal. He makes only a general argument
that the trial evidence showed that he was the agent of Francis and therefore the trial
court’s refusal to give the special instructions he proposed on agency prevented him from
establishing an agency defense. Accordingly, since Richard has “not shown that any
particular proposed instruction was proper,” we determine that Richard has not shown
error in the denial of any of his proposed agency instructions. (Bell v. H.F. Cox, Inc.
(2012) 209 Cal.App.4th 62, 81.)
4. Instructional Error—Partnership
Richard argues that the trial court erred in refusing all of the special instructions
that he proposed on partnership because the instructions that the trial court gave on
partnership prevented the jury from finding, as the evidence showed, that he and Francis
were not partners.
28
 Background
The record reflects that Richard proposed the following 11 special instructions on
partnership: (1) “A partnership is an entity distinct from its partners.”; (2) “The mere
fact that compensation to one or all of the parties is dependent upon the enterprise
producing a profit, and that such profit is shared in proportions, does not constitute the
arrangement of a co-partnership. Profit testing is not the test of partnership.”; (3) “The
sharing of gross returns does not by itself establish a partnership, even if the persons
sharing them have a joint or common right or interest in property from which the returns
are derived.”; (4) “Joint tenancy, tenancy in common, tenancy by the entireties, joint
property, common property, or part ownership does not by itself establish a partnership,
even if the co-owners share profits made by the use of the property.”; (5) “A payment
from business profits is a lawful method to compensate a party for referral services. The
fact that Thomas Francis paid a referral fee to defendant, Richard Sutherland, does not,
by itself, mean that defendant Richard Sutherland and Thomas Francis were conducting
business as partners.”; (6) “A partnership is not liable for property sold and delivered to
one partner in his individual capacity. A partnership is not liable to a plaintiff where the
property was taken in the name of the individual member and the deposit was taken and
retained by him.”; (7) “A contract executed by an individual is presumed to be the
contract of the individual and not of a partnership to which the individual belongs. The
party alleging liability of the partnership for the contract signed by an individual bears the
burden of proof on this issue.”; (8) “The party alleging the existence of a partnership has
the burden of proving that fact by a preponderance of the evidence.”; (9) “In the absence
of joint ownership, joint liability, and joint control of a business, an agreement to share
the profits, alone, does not establish that a business is a partnership.”; (10) “A limited
liability company is not a partnership.”; and (11) “An agreement to share the profits of a
business does not create a partnership unless each partner has equal rights in the
management and conduct of the partnership business.”
29
 The trial court placed a handwritten note on the first of Richard’s proposed
partnership instructions that states: “The court refused the following partnership
instructions offered by Richard [and] Katherine Sutherland, M.D. . . . because the [court]
concluded that the instructions given were appropriate.”
The Parties’ Contentions
According to Richard, the trial court improperly failed to give instructions that
would have permitted the jurors to find that the evidence showed that he and Francis
were not partners. Specifically referring to two proposed special instructions on profit
sharing and on equal rights in the management and control of the business, Richard
argues that “[t]he court’s refusal to give these instructions prevented the jury from even
considering the factors (such as lack of joint control and the lack of an agreement to share
losses) that would have allowed it to find there was no partnership.” Richard also argues
that a special instruction given by the trial court that was entitled “ ‘Presumption of the
Existence of an Partnership’ ”15 improperly “shifted the jury’s focus to the ‘presumed’
partnership” and “very likely misled the jury and affected the verdict.”
Plaintiffs respond that the special instructions that the trial court gave on
partnership were properly derived from various provisions in the Corporations Code and
that the two instructions proposed by Richard on profit sharing and equal rights in
management and control of the business were based on decisions that predate the modern
Corporations Code. Plaintiffs also argue that the evidence established the elements of
actual and apparent partnership between Richard and Francis (for example, they referred
to themselves as partners and were associated in a common endeavor with an agreement

15
“(Special Instruction 5) Presumption of the Existence of a Partnership” states:
“The sharing of gross returns does not by itself establish a partnership, even if the persons
sharing them have a joint or common right of interest in property from which the returns
are derived. [¶] A person who stands to receive a share of the profits is presumed to be a
partner absent evidence that the profit is a payment unrelated to the earnings of the
partnership.”
30
to split the profits), and therefore the trial court correctly instructed the jurors on both
actual and apparent partnership.
Analysis
We reiterate that “[a]n appellant must affirmatively demonstrate error through
reasoned argument, citation to the appellate record, and discussion of legal authority.
[Citations.] Accordingly, we cannot conclude that the refusal to give an instruction was
error absent an adequate showing that the proposed instruction was proper. [Citation.]”
(Bullock, 159 Cal.App.4th at p. 685.) Richard has again failed to meet this burden.
Of the 11 special instructions on partnership that Richard requested and the trial
court refused, he only mentions two—one on profit sharing and one on equal rights in the
management and control of the business—in his argument on appeal. Richard does not
support his argument that these two special instructions should have been given with any
citation to legal authority regarding the appropriate instructions on partnership, with the
exception of his contention that his proposed special instruction on equal rights in the
management and control of the business was properly derived from Corporations Code
section 16401, subdivision (f).16
Instead, Richard makes the conclusory assertion that the absence of these two
instructions prevented the jurors from considering factors that would have allowed the
jurors to find that he and Francis were not partners. He provides no legal authority for
the proposition that a special instruction based on Corporations Code section 16401,
subdivision (f) is necessary for the trier of fact’s determination of partnership.17

16
Corporations Code section 16401, subdivision (f) states: “Each partner has
equal rights in the management and conduct of the partnership business.”
17
The CACI instruction on partnership states: “A partnership and each of its
partners are responsible for the wrongful conduct of a partner acting within the scope of
his or her authority. [¶] You must decide whether a partnership existed in this case. A
partnership is a group of two or more persons who own a business in which all the
partners agree to share the profits and losses. A partnership can be formed by a written or
31
 Accordingly, we determine that Richard has not shown error in the trial court’s
refusal of his proposed special instructions on partnership.
C. Code of Civil Procedure section 473, subdivision (b) Motion for Relief
Richard’s final contention on appeal is that the trial court abused its discretion in
denying his Code of Civil Procedure section 473, subdivision (b) (hereafter, section 473,
subdivision (b)) motion for relief from his voluntary dismissal of his cross-complaint
against Francis.
Background
On the morning of December 5, 2011, the last day of trial testimony, Richard
dismissed his cross-complaint against Francis, as indicated in the following colloquy.
“THE COURT: The development that just happened was that [Richard’s attorney]
indicated in chambers this morning that Richard Sutherland will dismiss the cross-
complaint against Dr. Tom Francis. Does he need to do that right now?
“[RICHARD’S ATTORNEY]: That’s correct. We are going to dismiss that. Mr.
Sutherland is present in court. Do you agree to that, sir?
“[RICHARD]: Yes, sir, I do.”
The next day, December 6, 2011, Richard’s attorney requested relief from
Richard’s voluntary dismissal of the cross-complaint, pursuant to section 473,
subdivision (b) as follows:
“[RICHARD’S ATTORNEY]: Your Honor, the first thing . . . is based upon a
mistake that I made yesterday, and I’m asking for relief under [section] 473(b), of the
Code of Civil Procedure. [¶] What I did was — my intention was to dismis[s] [the]

oral agreement or by an agreement implied by the parties’ conduct.” (CACI No. 3711.)
Corporations Code section 16202, subdivision (a) provides in part: “the association of
two or more persons to carry on as coowners a business for profit forms a partnership,
whether or not the persons intend to form a partnership.”

32
Cross-Complaint for damages. In other words, I was not putting on any evidence
regarding damages, but mistakenly included in the dismissal of the Cross-Compliant was
the indemnification cause of action. [¶] I did not intend nor my client in particular nor I,
intended to get rid of the indemnification. I’m asking for [relief] under [section] 473(b)
to be allowed to proceed with that cause of action because two-fold: [¶] Number 1, it
was my mistake. I don’t think my client should be penalized for that. [¶] Number 2, no
additional testimony was or is needed for that cause of action. My thought process was
that we would not proceed on the breach of contract cause of action, the common cause,
cause of action, the other causes of action, but did not mean to give up my client’s right
to seek indemnification in the event the jury found he is liable, but Dr. Francis is equally
liable and [Richard] should be indemnified for any losses. [¶] . . . [¶]
“[THE COURT]: Do you have jury instructions and forms of verdict on any
portion of the Cross-Complaint that you brought here today?
“[RICHARD’S ATTORNEY]: I don’t. I just wanted to bring it to the court’s
attention and make a ruling. [¶] . . . [¶] I admit it was definitely my mistake. This falls
on me and no one else. Candidly, when I went back into chambers and I told the Court
that we would be able to shorten it up because I had talked to my client and prevailed
upon him that I didn’t think it was worth pursuing the Cross-Complaint for damages.
[¶] I just didn’t think about the indemnification or the second cause of action [for]
apportion[ment] of fault.”
The trial court denied Richard’s request for relief under section 473,
subdivision (b) on the grounds that Richard had offered no jury instruction or verdict
form with respect to the cross-complaint and “it would be very prejudicial at this time [to
grant relief] with the case having been submitted and without providing really an
opportunity for Dr. Francis to defend the Cross-complaint, it would just be a violation of
rights.”

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 The Parties’ Contentions
Richard argues that his motion for relief under section 473, subdivision (b) should
have been granted because it was promptly made and “[i]t is clear that [his] counsel was
not guilty of ‘inexcusable neglect’.” He further contends that there would have been no
prejudice to Francis in granting relief from the dismissal of the cross-complaint since no
additional testimony was needed and only “a small amendment” to the special verdict and
jury instructions was necessary.
In response, Francis contends that (1) the appeal must be dismissed because
Richard failed to include the order denying his motion for relief under section 473,
subdivision (b) in his notice of appeal and no timely sufficient notice of appeal was filed;
(2) even if the notice of appeal is sufficient, Richard lacks standing to appeal since he is
not aggrieved in the absence of any entitlement to recover on an indemnity theory; (3) the
trial court did not abuse its discretion because the motion did not either comply with the
requirements for mandatory relief under section 473, subdivision (b) or include a
showing of excusable neglect or mistake adequate for discretionary relief; and
(4) granting the motion would result in prejudice because the case was submitted to the
jury without Francis having the opportunity to defend the cross-complaint.
Analysis
As a threshold matter, we consider whether the trial court’s order denying
Richard’s motion for relief from his voluntary dismissal of the cross-complaint is
appealable. The order was expressly included in the December 19, 2011 judgment,
which stated, “Judgment is entered in favor of defendant and cross-defendant Thomas
Francis on the cross-complaint of defendant and cross-complainant RICHARD R.
SUTHERLAND, pursuant to the voluntary dismissal of said cross-complaint, as recited
on the record.” Since the order was included in the judgment, it was appealable. (See
Bias v. Wright (2002) 103 Cal.App.4th 811, 817 [judgment incorporating order granting
motion was a final appealable judgment under Code of Civil Procedure section 904.1,
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subdivision (a)(1)]; see also Leader v. Health Industries of America, Inc. (2001)
89 Cal.App.4th 603, 611 [order denying motion to vacate dismissal under section 473 is
appealable].) Moreover, Richard’s notice of appeal clearly stated that he was appealing
from the December 19, 2011 judgment.
We will therefore consider the merits of the order denying Richard’s motion under
section 473, subdivision (b) for relief from his voluntary dismissal of the cross-complaint.
The California Supreme Court has instructed that a party may obtain relief under section
473, subdivision (b) from a voluntary dismissal. (Zamora v. Clayborn Contracting
Group, Inc. (2002) 28 Cal.4th 249, 254-255 (Zamora).) We understand Richard to argue
that he was entitled to either mandatory or discretionary relief under section 473,
subdivision (b).
This court stated the requirements for obtaining mandatory relief under section
473, subdivision (b) in Huh v. Wang (2007) 158 Cal.App.4th 1406. “In certain cases of
attorney fault, section 473(b) requires the trial court to grant relief. The mandatory relief
provision states in pertinent part: ‘Notwithstanding any other requirements of this
section, the court shall, whenever an application for relief is made no more than six
months after entry of judgment, is in proper form, and is accompanied by an attorney’s
sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect, vacate
any (1) resulting default entered by the clerk against his or her client, and which will
result in entry of a default judgment, or (2) resulting default judgment or dismissal
entered against his or her client, unless the court finds that the default or dismissal was
not in fact caused by the attorney’s mistake, inadvertence, surprise, or neglect.’
(§ 473(b).) [¶] . . . ‘If the prerequisites for the application of the mandatory relief
provision of section 473, subdivision (b) exist, the trial court does not have discretion to
refuse relief.’ [Citation.]” (Id. at p. 1414.)
The record reflects that Richard failed to comply with the requirements for
obtaining mandatory relief, since his attorney did not submit a sworn affidavit of fault in
35
support of his motion for relief under section 473, subdivision (b). We therefore turn to
the question of whether the trial court erred in denying discretionary relief from
Richard’s voluntary dismissal of the cross-complaint.
“As relevant here, the discretionary relief provision of section 473, subdivision (b)
provides that: ‘The court may, upon any terms as may be just, relieve a party or his or her
legal representative from a judgment, dismissal, order, or other proceeding taken against
him or her through his or her mistake, inadvertence, surprise, or excusable neglect.’ ”
(Zamora, supra, 28 Cal.4th at p. 254.) Thus, “ ‘[a] party who seeks relief under section
473 on the basis of mistake or inadvertence of counsel must demonstrate that such
mistake, inadvertence, or general neglect was excusable because the negligence of the
attorney is imputed to his [or her] client and may not be offered by the latter as a basis for
relief.’ [Citation.]” (Id., at p. 258.)
“In determining whether the attorney’s mistake or inadvertence was excusable,
‘the court inquires whether “a reasonably prudent person under the same or similar
circumstances” might have made the same error.’ [Citation]. In other words, the
discretionary relief provision of section 473 only permits relief from attorney error ‘fairly
imputable to the client, i.e., mistakes anyone could have made.’ [Citation.] ‘Conduct
falling below the professional standard of care, such as failure to timely object or to
properly advance an argument, is not therefore excusable. To hold otherwise would be to
eliminate the express statutory requirement of excusability and effectively eviscerate the
concept of attorney malpractice.’ [Citation.]” (Zamora, supra, 28 Cal.4th at p. 258.)
The standard of review is abuse of discretion. “ ‘A ruling on a motion for
discretionary relief under section 473 shall not be disturbed on appeal absent a clear
showing of abuse.’ [Citation.]” (Zamora, supra, 28 Cal.4th at p. 257.) “Where the
mistake is excusable and the party seeking relief has been diligent, courts have often
granted relief pursuant to the discretionary relief provision of section 473 if no prejudice
to the opposing party will ensue. [Citations.]” (Id. at p. 258.)
36
 In the present case, the trial court determined that Richard did not make a
sufficient showing of excusable mistake. When Richard’s attorney made his oral motion
for relief from Richard’s voluntary dismissal of the cross-complaint, the attorney stated
that “my intention was to dismis[s] [the] Cross-Complaint for damages. In other words, I
was not putting on any evidence regarding damages, but mistakenly included in the
dismissal of the Cross-Compliant was the indemnification cause of action. [¶] I did not
intend nor my client in particular nor I, inten[d] to get rid of the indemnification. I’m
asking for [relief] under [section] 473(b) to be allowed to proceed with that cause of
action because . . . [¶] Number 1, it was my mistake. . . . [¶] . . . [¶] I just didn’t think
about the indemnification or the second cause of action [for] apportion[ment] of fault.”
Richard’s attorney did not offer any further explanation that demonstrated that the
mistake was excusable because “ ‘ “a reasonably prudent person under the same or
similar circumstances” might have made the same error.’ [Citation].” (Zamora, supra,
28 Cal.4th at p. 258.) We therefore conclude that the trial court did not abuse its
discretion in denying Richard’s motion for relief under section 473, subdivision (b) from
his voluntary dismissal of the cross-complaint.

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 IV. DISPOSITION
The December 19, 2011 judgment is affirmed. Costs on appeal are awarded to
respondents.

___________________________________________
BAMATTRE-MANOUKIAN, ACTING P.J.

WE CONCUR:

__________________________
MÁRQUEZ, J.

__________________________
GROVER, J.

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