I-CA Enterprises, Inc. v. Palram Americas, Inc.

Filed 2/18/15 I-CA Enterprises v. Palram Americas CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or
ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO

I-CA ENTERPRISES, INC., No. B243362

Plaintiff and Appellant, (Los Angeles County
Super. Ct. LC077949)
v.

PALRAM AMERICAS, INC.,

Defendant and Appellant;

PLASGAD PLASTIC PRODUCTS
AGRICULTURAL COOPERATIVE LTD.
OF KIBBUTZ GADOT,

Defendant and Respondent.

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

Law Office of Richard L. Weiner, Richard L. Weiner and Stephen M. Astor for
Plaintiff and Appellant.

Lewis Brisbois Bisgaard & Smith and Roy G. Weatherup for Defendant and
Appellant.

Kevin P. Kane Associates, Inc. and Kevin P. Kane for Defendant and Respondent.
 I-CA Enterprises, Inc. (I-CA) appeals from a final judgment following a jury trial
on I-CA’s claims of tortious interference with contractual relations against defendants
Palram Americas, Inc. (Palram) and Plasgad Plastic Products Agricultural Cooperative
Ltd. of Kibbutz Gadot (Plasgad). I-CA argues that it was entitled to a finding of joint and
several liability against both defendants, rather than a separate award against each
defendant. I-CA further argues that the trial court erred in granting a judgment
notwithstanding the verdict (JNOV) on the issue of punitive damages as to Palram and a
nonsuit on the issue of punitive damages as to Plasgad. Finally, I-CA argues that the
prevailing party determination as between I-CA and Plasgad must be reversed and
remanded for redetermination.
Palram cross-appeals from the judgment, arguing that no substantial evidence
supports the jury verdict against it for compensatory damages on the theory of tortious
interference with contractual relations. Finding no error we affirm the judgment.
FACTUAL BACKGROUND
The business relationships between the parties
I-CA is a small business incorporated in California in 1993 by husband and wife
Adina Aloni and Doron Aloni (Aloni). I-CA stands for Israel-California. I-CA was
established for the purpose of importing products from Israel to California.
Palram is a company based in Israel that manufactures and sells corrugated panels
in the United States.1 Palram uses the extrusion method to produce the corrugated
panels. The panels were attached to structures with wood closure strips -- also
manufactured by Palram -- that matched the corrugation of the Palram panels. In 1993,
Palram started trying to sell its products in Home Depot and some other retailers in the
do-it-yourself (DIY) market. I-CA opened the first warehouse for Palram in the United
States, and started importing the products from Israel.
Sometime in 1997 or 1998, Palram lost to a local wood supplier the business of
selling the wood closure strips to Home Depot. Aloni suggested to his contacts at Palram

1 Palram was first known as Suntuf, Inc., and is sometimes referred to as Suntuf in
the record.

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that a plastic closure strip would be less prone to break and could not be undercut by the
local wood supplier. The Palram executives informed Aloni that they could not
manufacture such a product because Palram is an extrusion manufacturer, not an injection
mold manufacturer. However, Palram had no objection to Aloni exploring this idea. The
Palram executives expressed interest in hearing from Aloni later on, after he had the
chance to develop the product.
Plasgad is an Israeli-based injection molding plastics manufacturer. In 1999,
Aloni attended a trade show for the DIY market in Chicago. There, he met Amnon
Shalman (Shalman), a representative of Plasgad. After the trade show, I-CA established
a business relationship with Plasgad whereby I-CA agreed to distribute, warehouse, and
market Plasgad products on the west coast. At that time, the only product Plasgad sold in
the DIY industry was a plastic tub for mixing concrete. Plasgad had no business
relationship with Palram.
Aloni invited two Plasgad executives to visit his warehouse in Van Nuys, where
he showed them the wood closure strips he was storing for Palram. Aloni told the
Plasgad executives about his idea of a plastic closure strip. After the executives’ return to
Israel, Plasgad informed Aloni that it would like to be the manufacturer for this plastic
closure strip, which together they would develop and take a chance on. Plasgad and I-CA
worked together for many years to develop the closure strip specifically for Palram
products. Plasgad insisted that it must own the patent for the new plastic closure strips.
Aloni was agreeable to this, as long as he could be the exclusive North America supplier
for the product. Plasgad obtained a patent for the strips on November 26, 2002.
In early 2001, former I-CA marketing manager Norm Cohen had an idea to
develop a private label mixing tub for Ace Hardware. Aloni brought the idea to Plasgad,
and Plasgad’s executives agreed to develop and sell the private label mixing tubs.
On February 20, 2002, a representative of Palram provided a written confirmation
letter stating that I-CA would be Palram’s sole supplier of the plastic closure strips, and
that Palram would be the exclusive distributor of these products in North America and
Latin America. The letter agreement was signed by both Palram and Aloni for I-CA.

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 In an email dated February 22, 2002, Plasgad indicated it was acceptable to
Plasgad that all purchases of the plastic closure strips in the United States be through
I-CA. Palram was aware that I-CA was the exclusive distributor of the strips in North
America.
Home Depot decided to sell the plastic strips in its stores. Beginning in 2005, the
wood closure strips being sold in all of Home Depot stores in North American were
replaced with the plastic strips. During this time, Palram bought 100 percent of the strips
that Plasgad was able to manufacture.
On May 8, 2005, Shalman of Plasgad notified Norm Cohen of I-CA that Palram
had contacted Plasgad directly. Shalman did not like this, because Palram was putting
him in a position where he had to reply. Shalman asked I-CA to “please take care of this
issue.” Shalman responded to his contact at Palram: “I-CA is our customer and all
contacts regarding the closure strips will have to go through them. I am sure you
understand that.” Aloni also had a conversation with the same contact at Palram and
reiterated that if Palram has any issues they must communicate with I-CA. Plasgad was
not permitted to “go around” I-CA.
The written contract between Plasgad and I-CA
On April 25, 2005, I-CA sent an email to Plasgad suggesting they put in writing
all of their verbal agreements relating to the plastic closure strips and the Ace Hardware
tubs. This suggestion was due in part to an impending change of leadership at Plasgad.
Plasgad agreed and indicated it would start working on a draft.
Plasgad’s attorneys prepared an agreement captioned “Marketing and Exclusivity
Agreement.” The first draft included a provision that allowed Plasgad to work directly
with Palram for marketing products outside of the United States. Aloni objected to this
provision, and requested that a provision be added prohibiting anyone but I-CA from
directly or indirectly distributing the plastic closure strips in North America. Plasgad
agreed to this modification and incorporated the change into the final version of the
agreement, which both Plasgad and I-CA signed. The final agreement clarified that any
merchandise sent to North America had to pass through I-CA. It also provided that the

4
parties would establish sales goals, and compliance with those goals would ensure
continued exclusivity for I-CA. The agreement could be terminated by either party upon
notice in writing, six months in advance.
Palram’s and Plasgad’s business relationships with I-CA end
In December of 2005, Plasgad increased its prices and asked I-CA to get this
change approved by Palram. I-CA engaged in “tough” negotiations with Palram. I-CA
informed Plasgad that it was a tough negotiation, and asked Plasgad not to communicate
with Palram if Palram approached Plasgad. Ultimately Palram agreed to the price
increase. However, I-CA received no orders from Palram for the plastic closure strips
between January and August of 2006.
Aloni contacted Palram regarding his concern that there were no orders during the
first half of 2006. He spoke with an individual at Palram who said that they had
sufficient inventory. In November 2006, the CEO of Palram called Aloni and informed
him that Palram was looking for a secondary supplier for the plastic closures. Aloni
objected, explaining that there was a patent on the closure and Palram could not purchase
it from someone else. Palram’s position was that they were looking for a secondary
option, and they could do what they wanted. Palram had no alternative plan as to how it
would supply Home Depot with the plastic strips.
Within a few days, I-CA informed Plasgad of its conversation with Palram and
Palram’s position. Plasgad’s representative indicated he would check the strength of the
patent.
On November 28, 2006, Palram sent I-CA a notice terminating the I-CA contract,
effective in 90 days. The president of Palram testified that at the time Palram terminated
its contract with I-CA, he did not know that Plasgad had a contract with I-CA.
On December 1, 2006, Plasgad sent I-CA a letter informing I-CA that it would
cease supplying I-CA with the plastic closure strips on May 31, 2007. Plasgad explained:
“I-CA has unfortunately not achieved the minimum level of sales required to retain the
rights to sell these products in the USA.” However, no sales goals for the plastic closure
strips had ever been established between the parties. In fact, I-CA had always sold

5
Palram 100 percent of the strips available. Plasgad’s manufacturing capability for the
product was at 100 percent, and Palram experienced a 21 percent increase in sales of the
strips in 2006.
On February 9, 2007, I-CA received its last order from Palram for the plastic
closure strips. In February 2007, Plasgad was in discussions with Palram to sell the
plastic closure strips directly to Palram. Plasgad began selling the plastic closure strips
directly to Palram in 2007.
In August 2007, I-CA discovered that Ace Hardware was purchasing the plastic
mixing tubs directly from Plasgad. Ace inadvertently sent a purchase order to I-CA
indicating that Plasgad was going directly to Ace with the mixing tubs. Plasgad has had
no business relationship of any kind with I-CA from mid-2007 through the present. From
2007 through the present, Plasgad has been selling the plastic closure strips directly to
Palram.
I-CA claims an offset for the breach
On advice of legal counsel, I-CA determined that as a consequence of Plasgad’s
actions, I-CA could offset the amounts that came due to Plasgad for the plastic closure
strips. Thus, after February 2007, I-CA declined to pay outstanding sums due for the
strips. At trial, I-CA acknowledged the amount owing to Plasgad but believed it was
owed more due to Plasgad’s conduct.
I-CA’s business collapses
I-CA suffered a significant financial setback due to the loss of the business with
the plastic closure strips and the Ace mixing tubs. At the time that Palram and Plasgad
shut I-CA out of these businesses, I-CA was attempting to develop a new embedded
stone product. However, without the revenue from the strips and tubs, there was
insufficient capital to finance the new venture. The Alonis shrank their business and
ceased taking salaries from I-CA. Aloni obtained a contractor’s license and did his best
to supplement the family’s income.

6
 PROCEDURAL HISTORY
Pretrial pleadings and briefing
On May 14, 2007, I-CA filed a complaint against Palram and Plasgad for breach
of contract, tortious interference with contractual relations, and accounting. On August 7,
2009, I-CA filed the operative first amended complaint containing the same causes of
action. Each cause of action was separately pled against each defendant. Neither
complaint contained allegations of joint and several liability.
Both Palram and Plasgad answered the first amended complaint with a general
denial and asserted various affirmative defenses.
Plasgad filed a cross-complaint against I-CA, Aloni, and Adina Aloni. The cross-
complaint asserted causes of action for breach of written contract, fraud, reasonable value
of goods, money had and received, account stated, book account, open account, and
declaratory relief. Plasgad alleged that the Alonis were alter egos of I-CA. Plasgad
further alleged that Plasgad and I-CA entered into a contract in 2005 under which I-CA
agreed to purchase products from Plasgad and resell them in North America. The
contract was terminable at will by either party with six months’ notice. After Plasgad
gave written notice of its decision to terminate the contract, I-CA and the Alonis refused
to pay for products shipped to I-CA. Plasgad alleged that it was owed $327,396.96 plus
interest at the time that the contract expired, and that such amount remained unpaid at the
time of the filing of the cross-complaint.
I-CA and the Alonis answered the Plasgad cross-complaint, generally denying its
allegations and asserting a variety of affirmative defenses, including a claim for offset
pursuant to Code of Civil Procedure section 431.70.
Shortly before trial, Plasgad and Palram jointly moved to sever “issues of
contractual interpretation concerning mutual at-will termination provision” in their
respective contracts with I-CA. In opposition, I-CA abandoned its breach of contract
claims against defendants, seeking to proceed to trial only on its contractual interference
claims. Because I-CA intended to proceed to trial only on its causes of action for
intentional interference with contractual relations, the trial court concluded “[t]his moots

7
the issue of contract termination, as breach is not a required element of [the intentional
interference] claim.” Plasgad’s and Palram’s severance motion was denied on the ground
that there was no need for court interpretation of the contractual at-will termination
provision.
Phase I of trial
Trial commenced in January 2012.
Near the end of phase I of trial, the trial court asked the parties to brief the issue of
damages. I-CA argued that Palram and Plasgad were joint tortfeasors and that joint and
several liability should be imposed upon them. Palram argued that I-CA must prove the
actual damages caused by each defendant. Because a party cannot interfere with its own
contract (citing Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th
503, 514 (Applied)), I-CA could only seek from Palram damages for its interference with
the I-CA/Plasgad contract, and could only seek from Plasgad damages for its interference
with the I-CA/Palram contract. Because I-CA’s expert was unable to allocate damages
between the two defendants, Palram asked that the testimony be stricken as speculative.
In an order dated January 27, 2012, the trial court agreed with defendants that any
damages would not be joint and several. The court stated: “It must be remembered that
there are two distinct contracts involved and the damages flowing from the breach of
each would not seem to be identical. Furthermore, if the jury were to find both
defendants liable, they would, in effect, be finding a defendant liable for having
interfered with its own contract which is improper.” However, the court declined to
exclude I-CA’s expert’s testimony in its entirety, therefore Palram’s motion was denied.
The trial court provided the following instruction to the jury on damages:
“In this case, I-CA Enterprises, Inc. seeks damages from more than
one defendant. You must determine the liability of each defendant to
[I-CA] separately. If you determine that more than one defendant is liable
to [I-CA] for damages, you will be asked to find the total damages, if any,
for which each defendant is separately liable. With respect to damages
claimed by [I-CA] allegedly arising from the loss of the ACE Hardware
tubs business, such damages, if any, may be attributed only to [Palram] and
not to [Plasgad].”

8
 On January 30, 2012, at the end of phase I of trial, the jury returned a special
verdict. The jury found that contracts existed between I-CA and both Palram and
Plasgad, that each company knew of the other company’s contract with I-CA and
intentionally disrupted that contract. The jury found that I-CA was harmed by the
disruption and that each company’s conduct was a substantial factor in causing that harm.
The jury found that Palram and Plasgad were each separately liable to I-CA for
$225,137.62. The jury further found that both Palram and Plasgad engaged in the
tortious conduct with malice, oppression or fraud.
In a separate special verdict, the jury found that I-CA refused to pay for goods that
Plasgad delivered to I-CA. The jury found that I-CA owed $327,396.96 to Plasgad for
these goods. The court also awarded Plasgad prejudgment interest on the $327,396.96
plus $89.70 per day until entry of judgment.
Plasgad’s nonsuit in phase II of trial
Prior to trial, I-CA served discovery seeking to obtain Plasgad’s financial
information in the event of a punitive damages finding. In November 2011, the parties
stipulated that any evidence of the defendants’ financial condition would not be admitted
until after the jury returned a verdict awarding actual damages and a finding of malice,
oppression or fraud.
After phase I of trial, I-CA renewed its request for Plasgad’s financial information.
Plasgad refused to produce such information, and in February 2012 I-CA filed a motion
to compel. I-CA argued that Plasgad had refused to produce its financial information,
which was necessary for the jury to consider in awarding punitive damages against
Plasgad. I-CA proposed to take the deposition of the custodian of records for Plasgad
telephonically, obviating the need for the custodian to travel to California.
On February 23, 2012, the trial court entered an order on the motion. The court
found that under Code of Civil Procedure section 1989, a court lacks the power to compel
nonresidents to attend trial or to produce documents. The court concluded that it had no
power to enforce an order to compel attendance of a party over whom it has no

9
jurisdiction as a result of Code of Civil Procedure section 1989. There was no dispute
that Plasgad and its officers and other personnel are nonresidents.
Furthermore, the court held, I-CA’s notice to appear was deficient in that it failed
to state with specificity the documents to be produced, instead broadly requesting all
financial records. I-CA’s motion to compel was denied in its entirety. The court noted,
“To the extent [Plasgad] has been relieved of an obligation to comply and produce, that
situation is attributable, in whole or at least in large part, to [I-CA’s] apparent lack of
diligence and preparation. It is almost inconceivable that this court has been forced to
deal with this issue at this stage given that fact that this case has been pending for almost
[five] years and [I-CA] has at all times known it was dealing with at least one entity
defendant domiciled in a foreign jurisdiction.”
As a consequence of the trial court’s ruling on its motion to compel, I-CA had
insufficient evidence of Plasgad’s net worth and financial condition for the purpose of
proving punitive damages. I-CA attempted to offer the testimony of its economic expert
that Plasgad’s financial condition was as reported in Dun & Bradstreet (D&B). Plasgad
filed an ex parte application to prevent this testimony, which the court granted, finding
that the information was inadmissible hearsay.
Under the circumstances, the trial court granted Plasgad’s motion for nonsuit on
I-CA’s claim for punitive damages and excused its counsel from participation in phase II.
Phase II as to Palram
Phase II of trial proceeded as to Palram only. The jury awarded punitive damages
against Palram in the sum of $3 million.
Posttrial motions
Palram moved for JNOV. Palram argued that there was no basis for joint and
several liability, that the damages were never allocated as to each defendant, and that
punitive damages were improper and excessive. Palram argued that there was no
evidence of oppression, fraud or malice and that the punitive damages award was
unconstitutionally excessive. Palram also filed a motion for new trial on the same
grounds as the JNOV motion.

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 On July 2, 2012, the court heard argument on Palram’s JNOV motion and motion
for new trial. It also heard argument on I-CA’s motion for entry of a judgment of joint
and several liability in the amount of $450,275.75, and on Plasgad’s motion for a
determination that it was the prevailing party against I-CA.
The trial court denied I-CA’s motion for entry of a joint and several judgment.
The court relied on the rule set forth in Applied, supra, 7 Cal.4th at page 510, that a party
cannot be held liable for conspiracy to interfere with its own contract. The court stated
that “it is difficult to understand how these defendants could be jointly and severally
liable for damages when to do so, would be to hold each responsible, in part, for damages
associated with interference with its own contract.”
Plasgad’s motion that it be deemed the prevailing party was granted, thereby
permitting Plasgad to recover costs of suit. The court reasoned that Plasgad was the party
that obtained the net recovery. Because the net recovery was favorable to Plasgad,
Plasgad was entitled to its costs.
Palram’s motion for new trial was denied, but its JNOV motion was granted as to
punitive damages only. The court held that the jury’s verdict as to punitive damages was
“seriously problematic for a number of reasons relating to both the initial finding and the
amount ultimately awarded.” First, the court noted that punitive damage awards in
California are not to exceed 10 percent of a defendant’s net worth. (Citing Weeks v.
Baker & McKenzie (1998) 63 Cal.App.4th 1128.) Here, the jury’s $3 million verdict was
over 21 percent of Palram’s net worth of approximately $14 million.
Further, viewing the evidence in the light most favorable to I-CA, the court found
that as to each of the grounds advanced by I-CA as the jury’s basis for a finding of
malice, oppression or fraud, the court found “no substantial evidence to support such
findings of malice, oppression or fraud.”
Judgment
The court entered a final judgment on July 3, 2012. Separate awards were entered
in favor of I-CA against Palram and Plasgad in the amount of $225,137.62 plus
prejudgment interest. A third monetary award was made in favor of Plasgad and against

11
I-CA for breach of contract in the amount of $327,396.96, plus prejudgment interest in
the amount of $157,778.41. It was further ordered that the award in favor of Plasgad
should be offset against the award in favor of I-CA, resulting in a net recovery to Plasgad
of $260,604.48.
I-CA was awarded costs against Palram as the prevailing party, but Plasgad was
awarded costs against I-CA as the prevailing party.
After phase III of trial, which commenced on August 30, 2012, judgment was
entered in favor of the Alonis on the cross-complaint against them by Plasgad with
respect to the alter ego claims. The court found that Plasgad had failed to carry the
burden of proof on these claims.
Appeal and cross-appeal
On August 14, 2012, I-CA appealed from the judgment entered July 3, 2012, from
the partial JNOV as to punitive damages in favor of Palram, and from other orders and
rulings.
On August 31, 2012, Palram cross-appealed from the judgment of July 3, 2012,
and from all intermediate orders and rulings.
DISCUSSION
I. Direct appeal
A. Joint and several liability
I-CA’s first argument is that it was entitled to a joint and several judgment against
both defendants in the amount of $450,275.25. As set forth above, the trial court
concluded that Plasgad and Palram could not be held jointly and severally liable when to
do so would be to hold each responsible, in part, for damages associated with interference
with its own contract. We review this legal ruling de novo. (Acosta v. SI Corp. (2005)
129 Cal.App.4th 1370, 1374 [issue of law on undisputed facts is subject to de novo
review].)
1. General legal principles regarding joint and several liability
In Kesmodel v. Rand (2004) 119 Cal.App.4th 1128 (Kesmodel), the Second
Appellate District concluded that section 15 of the Restatement Third of Torts adopted in

12
1999 “is consistent with statements in decisions from this state’s highest court.”
(Kesmodel, supra, at p. 1144.) The section states: “‘When persons are liable because
they acted in concert, all persons are jointly and severally liable for the share of
comparative responsibility assigned to each person engaged in concerted activity.’” (Id.
at p. 1143.) Comment a to the section explains “‘[t]he joint and several liability of those
engaged in concerted activity is for the total comparative responsibility assigned to all
who engage in the concerted activity. . . .’” (Id. at p. 1144, fn. omitted.)
The concept of joint and several liability is only applicable where the plaintiff’s
injury is “indivisible.” (Kesmodel, supra, 199 Cal.App.4th at p. 1143.) In Applied, the
Supreme Court discussed the concept of conspiracy and concluded that where a civil
conspiracy is present, “‘“each participant in the wrongful act [is] responsible as a joint
tortfeasor for all damages ensuing from the wrong.”’” (Applied, supra, 7 Cal.4th at p.
511.) However, “[t]he propriety of imposing joint and several liability on defendants
who act as part of a joint enterprise to commit an indivisible injury should be contrasted
with situations where the evidence makes it possible to equitably apportion liability
between or among negligent and strictly liable tortfeasors, or negligent and intentional
actors. [Citations.]” (Kesmodel, supra, at p. 1145, fn. 41.)
In Applied, the Supreme Court addressed the question of whether a contracting
party can be held liable in tort for interference with its own contract. It answered this
question in the negative. (Applied, supra, 7 Cal.4th at p. 508.) Thus, in the present
matter, neither Plasgad nor Palram can be liable for any damages associated with any
interference with its own contract. Each defendant can only be liable for interference
with the other defendant’s contract. Where, as here, each actor is responsible for an
independent tort, liability may be apportioned between the two and the concept of joint
and several liability is inapplicable.
2. I-CA did not allege conspiracy
In Kesmodel, the plaintiff alleged false imprisonment and conspiracy against two
neighbors. The Kesmodel court explained, “‘[c]onspiracy is not a cause of action, but a
legal doctrine that imposes liability on persons who, although not actually committing a

13
tort themselves, share with the immediate tortfeasors a common plan or design in its
perpetration.’” (Kesmodel, supra, 119 Cal.App.4th at p. 1141.) Because the two
neighbors were found to have engaged in a conspiracy, the Kesmodel court concluded
that joint and several liability was appropriate: “in this circumstance each coconspirator
is equally liable for each coconspirator’s share of the damages caused by the conspiracy.”
(Id. at p. 1145, fn. omitted.)
I-CA did not allege a conspiracy theory, and the jury did not find that the elements
of a conspiracy existed.2 I-CA acknowledges that it did not allege a civil conspiracy
against Palram and Plasgad, but instead focused on the independent wrongful acts of
Palram and Plasgad in interfering with the other entity’s contract.
Having failed to allege and prove a civil conspiracy, I-CA now attempts to argue
that its evidence against Palram and Plasgad showed “collusion,” or “agreement”
between these two entities. I-CA first contends that it proved to the jury that the actions
of Palram and Plasgad were “collusive.” I-CA has not provided a citation to the record
indicating where the jury made a finding of collusion.
I-CA further points to evidence which, I-CA claims, supports the jury’s “implicit”
finding that the two separate torts happened by “agreement.” I-CA asserts that it
demonstrated that the defendants had an agreement to terminate both contracts, and that
they embarked on a deceitful plan to hide their concerted acts from I-CA. Again, I-CA
has not provided a citation to the record showing where the jury made a finding that
Palram and Plasgad had an agreement to engage in the contractual interference.
Furthermore, I-CA’s references to evidence of collusion and agreement between
the parties is insufficient to support the application of joint and several liability. I-CA
failed to assert a conspiracy theory in the trial court, and failed to obtain any specific
findings regarding concerted action. Thus, there is no basis for joint and several liability.

2 The elements of a civil conspiracy are: “(1) formation and operation of the
conspiracy and (2) damage resulting to plaintiff (3) from an act done in furtherance of the
common design. [Citation.]” (Thompson v. California Fair Plan Assn. (1990) 221
Cal.App.3d 760, 767.)

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 3. I-CA’s damages were not indivisible
I-CA argues that regardless of the theory of liability, I-CA’s damages were
indivisible, thus joint and several liability is appropriate. The damages were loss of
profits flowing from two products that I-CA was instrumental in creating: the plastic
closure strips and the Ace mixing tubs. According to I-CA, such damages were
indivisible, and joint and several liability must be imposed.
I-CA’s argument is not supported with any legal or logical rationale as to why its
loss of profits could not be divided between the two entities. In fact, the jury did divide
the damages between Plasgad and Palram. Each defendant was responsible for the
portion of I-CA’s total damages arising from its interference with the other defendant’s
contract. However, each defendant was specifically precluded by law from being held
liable for the damages arising out of the interference with its own contract. (Applied,
supra, 7 Cal.4th at p. 508.) Under the circumstances, the jury’s decision to hold each
defendant liable for 50 percent of I-CA’s total damages was acceptable.
Contrary to I-CA’s position, the cases cited by the trial court support
apportionment of the liability in this case. The first, Connor v. Grosso (1953) 41 Cal.2d
229, was an action for damages where the defendant had dumped dirt on the plaintiff’s
property. The court found that the defendant could only be held liable for the dirt that he
actually dumped: “Since Grosso did not act in concert with the other persons dumping
dirt on the Connor land, he cannot be required to pay for removal of the dirt dumped by
them. [Citation.]” (Id. at p. 232.) Similarly, in California Orange Co. v. Riverside
Portland Cement Co. (1920) 50 Cal.App. 522, two cement companies wrongfully
operated their cement plants in such a way as to deposit cement dust on the plaintiff’s
orange grove. The court found that the two cement companies were not joint tortfeasors,
and “[t]heir respective torts, . . . were several when committed, did not become joint
merely because of a commingling of the dust from the respective plants and a union of
the consequences proceeding from the several and independent tortious acts.
[Citations.]” (Id. at p. 524.) In determining the amount of damages to be assessed
against one defendant, the trial court was “at liberty to estimate, as best it could, from the

15
evidence before it, how much of the total damage, caused by the operations of the two
cement companies, was occasioned by defendant’s plant.” (Ibid.) Finally, in Griffith v.
Kerrigan (1952) 109 Cal.App.2d 637, seepage from the defendant’s rice fields combined
with seepage from nearby canals produced injury to the plaintiff’s land. (Id. at p. 638.)
Under the circumstances, the court held apportionment of damages to be appropriate. (Id.
at pp. 639-640.)
These cases illustrate that independent wrongs do not become joint even if the
damages resulting from the wrong add up to one particular type of damage. Here, the
damage to I-CA was its loss of profits. The jury was at liberty to determine how much of
that damage was attributable to the tort of each individual defendant.
4. The court did not misconstrue the jury verdict
I-CA argues that it is clear from reading the jury verdict that the jury found total
damages of $450,275.25, then divided that total in half. I-CA argues that the court
should have entered judgment in accordance with the verdict, because the sum of
$450,275.25 was indivisible.
We find that the jury verdict forms do not support I-CA’s theory that the jury
found total damages of $450,275.25. The jury did what it was instructed to do. It
determined the liability of each defendant separately.
Even if the jury had referenced a total damages figure of $450,275.25 -- which it
did not -- damages were properly apportioned in this case between the two defendants.
I-CA has failed to convince us that there is a sound legal basis for joint and several
liability in this case.
B. The Palram JNOV
I-CA next attacks the trial court’s decision to grant Palram’s JNOV motion in part
as to punitive damages. The trial court determined that there was insufficient evidence of
malicious, oppressive or fraudulent conduct to sustain the jury’s punitive damage award.
1. Standard of review
“A motion for judgment notwithstanding the verdict may properly be granted only
when, disregarding conflicting evidence and indulging in every legitimate inference

16
which may be drawn from plaintiff’s evidence, the result is a determination that there is
not evidence sufficiently substantial to support the verdict. On appeal, we must read the
record in the light most advantageous to plaintiff, resolve all conflicts in his favor and
give him the benefit of every fact pertinent to the issues involved and which may be
reasonably be deduced from the evidence. [Citation.]” (Bufano v. San Francisco (1965)
233 Cal.App.2d 61, 68.)
2. The trial court’s ruling
The trial court provided a detailed ruling setting forth its rationale for granting the
JNOV as to punitive damages. The trial court considered the five grounds which I-CA
claimed supported the jury’s finding that Palram had been guilty of oppression, fraud, or
malice. Those grounds were: “(1) [Palram executive] Ron Dvir’s testimony that he
knew the strips were protected by a patent and yet Palram was supposedly prepared to
infringe on the patent by having the strips copied; (2) Palram claimed that it was not
going to allow exclusive agreements because it, and it alone, decided who it was going to
purchase from; (3) Palram stated that after its termination of I-CA, that I-CA should have
sold directly to Home Depot, even though Palram knew full well that this would have
been interference with Palram’s contractual relationship with Home Depot; (4) Palram’s
smearing of Doron and Adina Aloni by accusing them of theft without offering a shred of
evidence in support; and (5) Palram’s continuing withholding of financial information
during the punitive damages phase of trial.”
The trial court concluded that, viewing this evidence in the light most favorable to
I-CA, it did not support the jury’s finding of malice, oppression, or fraud. “Mr. Dvir’s
testimony was not indicative of any fraud, oppression, or malice. The exclusivity
provision of the subject agreement was removed in 2005 at I-CA’s request and I-CA was
free to sell anywhere in North America. Due to the nature of the contract there was no
requirement of any specific purchases and the failure to place orders during any particular
period, in the context of an at-will contract, did not constitute despicable conduct or other
any such egregious conduct.”

17
 As to the purported theft of inventory, “Palram continued to do business with I-CA
for seven years after the inventory shortages. Mr. Seiffert never accused the Alonis of
any such theft and no investigation was ever undertaken of the Alonis as to same.”
The trial court noted that, in evaluating the relationship between I-CA and Palram
as a whole, there was evidence that mitigated any purported reprehensibility on the part
of Palram. The court noted that I-CA itself had engaged in deceitful conduct by
continuing to receive product from Plasgad for which it had no intention of paying.
The court stated: “[W]ithout any substantial evidence to support its finding of
fraud, oppression or malice, certainly not even remotely by the requisite clear and
convincing evidence standard, the jury then awarded $3,000,000.00 in punitive damages
against Palram; the precise amount asked for by [I-CA]. Even assuming, for argument’s
purposes, there had been substantial evidence supporting a finding of conduct to justify
imposition of punitive damages, the amount awarded still would have been out of the
bounds of reason.”
The court also noted, while it was not the primary basis upon which the court
granted the partial JNOV, its belief was that the punitive damage award resulted from
passion and prejudice. The court noted that the punitive damages verdict of $3 million
was followed by multiple exclamation marks. The court felt that “[t]he jury’s prejudice
was contributed to, if not entirely caused by, the jury’s obvious dislike for defense
counsel and their trial conduct.” At one time during trial, a juror asserted her own
Evidence Code section 352 objection, “with which many of the jurors obviously
concurred as evidenced by their collective grumblings in agreement.” The trial court also
noted that Palram’s counsel compounded the problem by insulting the jury, and stating
that the jury had “wasted its time and its mistake in finding liability in Phase I against
Palram.” I-CA’s counsel subsequently pointed out this “insult” to the jury during its
closing argument. In the opinion of the trial court, all of this inflamed the jury’s
passions.
In addition, the trial court found that the manner in which Palram’s financial
condition evidence was produced, and how it was handled at trial, further supported the

18
partial JNOV. The court felt there were too many unnecessary references to related
entities, which led it to conclude that I-CA “intended to place . . . emphasis on the other
entities, not to provide context or background, but to prejudice Palram by creating in the
jury’s mind that Palram Americas, although with offices in Pennsylvania, was not only
Goliath, but that, unlike I-CA whose business was a mile or two from the courthouse, it
was just a small part of a myriad of foreign businesses doing business all over the world
who were all doing business under a Palram umbrella.” The court also noted that at trial,
I-CA inquired of Palram’s witness why certain notes to financial statements were not
produced. The court insisted that the jury was not to hear anything further on the
withholding of any notes or financial information. Nevertheless, in closing argument I-
CA’s counsel “spent substantial time castigating . . . Palram for failing to produce certain
financial information.” The court felt that there was no willful suppression of evidence,
although I-CA insisted that there was.
Finally, the trial court was concerned that the jury punished Palram for
wrongdoing by Plasgad. After Plasgad’s motion for nonsuit as to punitive damages was
granted, “the jury had only Palram before it.” It was the court’s belief “that Palram is
correct in that the absence of Plasgad in Phase II, attributable to plaintiff’s lack of
diligence, worked to Palram’s ultimate and significant prejudice.”
For all of these reasons, the trial court concluded that no substantial evidence
supported the finding of punitive damages against Palram, and that the punitive damage
award was the result of passion, prejudice and/or application of an improper standard.
The JNOV as to punitive damages was granted.
3. I-CA’s arguments on appeal
On appeal, I-CA points to the same evidence that the trial court considered. First,
when Palram initially told I-CA it was looking for another supplier for the plastic closure
strips, it knew that the strips were patented, and that there could never be a secondary
supplier. I-CA states that the jury could easily have seen this as “nothing more than a
smokescreen designed to set the stage for Palram’s direct dealings with Plasgad.”

19
 In determining whether such a “smokescreen” may form the basis for punitive
damages, we look to the definitions found in Civil Code section 3294, subdivision (c)
which provides:
“(1) ‘Malice’ means conduct which is intended by the defendant to
cause injury to the plaintiff or despicable conduct which is carried on by the
defendant with a willful and conscious disregard of the rights or safety of
others.

“(2) ‘Oppression’ means despicable conduct that subjects a person
to cruel and unjust hardship in conscious disregard of that person’s rights.

“(3) ‘Fraud’ means an intentional misrepresentation, deceit, or
concealment of a material fact known to the defendant with the intention on
the part of the defendant of thereby depriving a person of property or legal
rights or otherwise causing injury.”

I-CA’s use of this smokescreen does not fit the definition of malice. A statement
that Palram was looking for another supplier could not cause injury to I-CA. It is merely
a statement that it is looking to do something. Nor does the statement constitute
oppression, as it did not subject anyone to cruel and unjust hardship. The only remaining
question is whether the statement could constitute fraud.
While it may be viewed as an intentional misrepresentation, Palram’s statement
that it was looking for another supplier cannot be said to have been made with the
intention to deprive I-CA of property or legal rights or of causing injury. I-CA lists no
specific action that it took to its own detriment in response to the statement. Nor were
there any direct consequences to I-CA from Palram’s statement that it was looking for a
secondary supplier. If anything, it provided Palram with an opportunity to attempt to
avoid disruption of its business. We therefore find that Palram’s statement that it was
looking for a secondary supplier, is not evidence of malice, oppression or fraud sufficient
to support an award of punitive damages.
I-CA also points out that when Palram terminated I-CA, it did so pursuant to a
nonexistent 90-day termination notice. In addition, Palram “pretended” that it had no
alternative plan as to how it would continue to supply Home Depot with the strips. I-CA

20
argues that to this day Palram has never used a secondary supplier because that was never
its intent.
Again, while deceitful, these actions do not amount to malice, oppression, or
fraud. While there is a level of deceit that is evident from Palram’s actions in pretending
that it had another alternative, this pretense did no harm to I-CA, as required by Civil
Code section 3294.
I-CA next points to evidence that during the first seven months of 2006, soon after
Home Depot made its decision to replace all the wood strips with plastic strips, Palram
suddenly ceased ordering the strips from I-CA. I-CA argues that this action served to set
up Plasgad’s fraudulent claim that I-CA failed to meet nonexistent sales goals. However,
I-CA does not take issue with the trial court’s finding that there was no contractual
requirement regarding any specific purchases. Thus, the failure to place orders during
any particular period, in the context of an at-will contract, did not constitute despicable
conduct or any other such egregious conduct. Where Palram was not contractually bound
to place orders, its conduct in declining to place orders cannot be considered malicious,
oppressive, or fraudulent. As to I-CA’s argument that Palram was colluding with Plasgad
to set up Plasgad’s later claim that I-CA was not meeting sales goals, I-CA has failed to
cite any evidence at all of such collusion.
I-CA argues that the jury heard evidence of Palram’s unfounded effort to shift the
blame to I-CA for Palram’s termination of the contract. I-CA claims that Palram alleged
that the Alonis were thieves, and that years earlier they had been stealing inventory from
Palram. I-CA claims that this callous willingness to disparage the reputation of the
Alonis was impossible for the jury to ignore. However, I-CA completely ignores the trial
court’s specific findings on this issue. The trial court noted that Palram never accused the
Alonis of theft. No investigation was ever undertaken, and Palram never asserted any
claim against I-CA for such conduct. Palram never even attempted to impose any offsets
against amounts owing by I-CA. I-CA does not challenge these factual findings made by
the trial court. Nevertheless, “[I-CA] took the position during trial that this subjective
and un-acted upon belief on [Palram’s] part, was itself reprehensible.”

21
 We agree with the trial court that a belief that is not acted upon cannot provide the
basis for a finding of malice, oppression or fraud.
Finally, I-CA accuses Palram of “manufacturing” a story about how Aloni was
negligent in not calling certain Palram executives upon receipt of Palram’s termination
letter, although Aloni’s relationship was not with those particular executives but was with
Amos Netzer in Israel. I-CA claims that Palram hoped the jury would find this conduct
to be reckless, and was designed to shift blame to I-CA for the disruption of its
relationship with Palram. I-CA provides no authority for its position that a party’s
advancement of a theory at trial may form the basis for an award of punitive damages.
None of the evidence advanced by I-CA in support of an award of punitive
damages meets the definition of malice, oppression or fraud set forth in Civil Code
section 3294. We therefore find that the trial court did not err in granting Palram’s JNOV
on the issue of punitive damages.3
C. The Plasgad nonsuit
I-CA next argues that the Plasgad nonsuit must be reversed. The trial court
granted the nonsuit in favor of Plasgad because there was no evidence of Plasgad’s

3 I-CA also argues that the trial court largely based its JNOV ruling on entirely
irrelevant matters, such as unrelated evidence that the court believed mitigated Palram’s
reprehensibility, discussion of whether the award was excessive, and the jury’s supposed
dislike of Plasgad’s counsel. Because we have determined that the evidence presented
was insufficient as a matter of law for imposition of punitive damages, we need not
address I-CA’s arguments as to the impropriety of the alternative reasons for its JNOV
ruling that the trial court discussed.
In particular, I-CA argues that the trial court relied on certain evidence of
collaboration between Plasgad and Palram behind I-CA’s back -- evidence that was
stricken from the record over I-CA’s objection. I-CA argues that this evidence was
improperly stricken from the record. We find that I-CA has failed to support this
argument with reasoned argument and citations to legal authority. I-CA has failed to set
forth the statutory basis for the exclusion of the evidence or provide any legal authority
explaining the trial court’s alleged error. “‘The absence of cogent legal argument or
citation to authority allows this court to treat the contention as waived.’ [Citations.]”
(Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.) We
therefore decline to address I-CA’s argument that this evidence was erroneously stricken
from the record.

22
financial condition. Without competent evidence of Plasgad’s net worth or financial
condition, an award of punitive damages cannot stand. (Adams v. Murakami (1991) 54
Cal.3d 105, 109 [“an award of punitive damages cannot be sustained on appeal unless the
trial record contains meaningful evidence of the defendant’s financial condition”].)
I-CA argues that the trial court erred in refusing to compel Plasgad to produce its
financial information, and by excluding other admissible evidence of Plasgad’s net worth.
1. No error err in denying I-CA’s motion to compel financial
information
a. The trial court’s rationale
The trial court gave several reasons for its decision to deny I-CA’s motion to
compel Plasgad’s financial information. First, the court referenced Code of Civil
Procedure section 1989, which provides: “A witness . . . is not obliged to attend as a
witness before any court, judge, justice or any other officer, unless the witness is a
resident within the state at the time of service.” The court concluded, based on Amoco
Chemical Co. v. Certain Underwriters at Lloyd’s of London (1995) 34 Cal.App.4th 554,
555 (Amoco), that a court cannot compel a nonresident to attend trial. The court further
concluded that “[a] court similarly lacks power to compel a non-resident to produce
documents because Code of Civil Procedure section 1989 ‘makes the right to request
documents contingent upon the requesting party’s right to request the appearance of a
party” (citing Amoco at p. 560). The court concluded that it had no power to compel the
production of documents situated in Israel.
Additionally, the trial court held I-CA’s discovery notice was “severely deficient.”
The court noted that “[I-CA] has not stated with any measure of specificity the
documents to be produced, instead broadly requesting all balance statements, profit and
loss statements, financial documents, and the like.” This failure put I-CA out of
compliance with Code of Civil Procedure section 1987, subdivision (c) which requires a
listing of the exact materials or things to be produced.
The court further ordered that I-CA would not be permitted to comment in front of
the jury as to Plasgad’s failure to produce evidence on the subject of its wealth. The

23
court noted, “To the extent [Plasgad] has been relieved of an obligation to comply and
produce, that situation is attributable, in whole or at least in large part, to [I-CA’s]
apparent lack of diligence and preparation. It is almost inconceivable that this court has
been forced to deal with this issue at this stage given the fact that this case has been
pending for almost [five] years and [I-CA] has at all times known it was dealing with at
least one entity defendant domiciled in a foreign jurisdiction.”
b. Code of Civil Procedure section 1989
I-CA has declined to cite or discuss Code of Civil Procedure section 1989 in its
briefs to this court. Therefore any challenge to the trial court’s reliance on that section, or
the court’s interpretation of that section, is forfeited.
I-CA has briefly addressed the cases cited by the trial court. I-CA attempts to
distinguish Amoco on the ground that the Amoco court did not discuss Code of Civil
Procedure section 2025.230, upon which I-CA relied.4 Instead, the case focused on the
obligation of a witness to appear in court in California if he is not a resident of California
at the time of service.
While Amoco did not directly discuss the application of Code of Civil Procedure
section 1989 to deposition witnesses, the issue was discussed in Toyota Motor Corp. v.
Superior Court (2011) 197 Cal.App.4th 1107 (Toyota). The Toyota court held, “[Code
of Civil Procedure] section 1989 applies not only to those witnesses obliged to attend as
witnesses in court proceedings, but those witnesses obliged to give testimony by
deposition before deposition officers.” (Id. at p. 1113.)
I-CA points out that, in a footnote, the Toyota court declined to express an opinion
as to whether Code of Civil Procedure section 1989 applies to section 2025.230.

4 Code of Civil Procedure section 2025.230 provides: “If the deponent named is not
a natural person, the deposition notice shall describe with reasonable particularity the
matters on which examination is requested. In that event, the deponent shall designate
and produce at the deposition those of its officers, directors, managing agents, employees,
or agents who are most qualified to testify on its behalf as to those matters to the extent of
any information known or reasonably available to the deponent.” Thus, I-CA was
seeking to depose a person most knowledgeable (PMK) on Plasgad’s financial condition.

24
Specifically, the Toyota court stated: “We express no opinion . . . as to whether our
analysis or the conclusions we have reached in this opinion would or should extend or
apply to a court order made pursuant to [Code of Civil Procedure] section 2025.230
which provides for the circumstances where ‘. . . the deponent named is not a natural
person . . . .’” (Toyota, supra, 197 Cal.App.4th at pp. 1125-1126, fn. 20.)
Aside from pointing out this footnote, I-CA has declined to make any reasoned
arguments as to why Code of Civil Procedure section 1989 should not apply when the
deposition has been noticed under section 2025.230, as opposed to any of the other
discovery statutes.
We note that the Toyota court also made reference to Twin Lock, Inc. v. Superior
Court (1959) 52 Cal.2d 754 (Twin Lock). In Twin Lock, the plaintiff, Twin Lock, Inc.,
was a resident of New York suing California defendants in a lawsuit filed in Los Angeles.
The defendants gave notice that they would depose certain officers of Twin Lock in
Los Angeles.5 Twin Lock moved to vacate the deposition notice, and the trial court
denied the motion. The defendants sought imposition of sanctions based on the officers’
willful failure to appear. (Id. at pp. 757-758.) On appeal, Twin Lock sought a writ of
prohibition to prevent the imposition of sanctions for its officers’ failure to appear for the
depositions.
The Supreme Court stated: “The disposition of this proceeding depends upon the
applicability of section 1989 of the Code of Civil Procedure.” (Twin Lock, supra, 52
Cal.2d at p. 758.) Twin Lock asserted that under Code of Civil Procedure section 1989,
“no form of compulsion, including the use of sanctions against a party, may be used by
the court to compel the New York residents to come to California.” (Ibid.) The high
court evaluated Code of Civil Procedure section 1989, noting that “[t]he word ‘witness’
in section 1989 includes a prospective witness who is a party or who is a director, officer,
or managing agent of a party.” (Twin Lock, at p. 759.) The court concluded that Code of
Civil Procedure section 1989 was “by its terms applicable to the New York residents

5 The deposition notice was based on Code of Civil Procedure section 2019, which
was repealed in 2004.

25
involved here.” (Ibid.) The court held that the trial court was “without power to impose
sanctions upon Twin Lock based upon the notice which defendants gave for the taking of
the depositions in Los Angeles of the New York residents.” (Id. at pp. 761-762.)
I-CA has declined to cite or discuss Twin Lock. The case supports the trial court’s
determination that it had no power to compel production of Plasgad’s financial records or
to compel a deposition of Plasgad’s nonresident PMK. Under the circumstances, I-CA
has provided no grounds for reversal of the trial court’s order.6
c. Timeliness of I-CA’s request
As an alternative rationale for its decision, the trial court noted I-CA’s lack of
diligence and preparation in failing to raise this discovery issue until the eve of the
punitive damages phase of trial. I-CA argues that parties and courts routinely defer
discovery of financial information until after the jury has returned a verdict with punitive
damages findings. I-CA cites Zhadan v. Downtown Los Angeles Motor Distributors, Inc.
(1979) 100 Cal.App.3d 821, 839 for the proposition that “the jury should make its
determination of the punitive damages based on the defendant’s net worth at the time of
trial.” The defendant had argued that its net worth at the time of injury was the proper
figure to submit to the jury. The court disagreed, confirming that the proper figure was
net worth at the time of trial. However, the court did not specify at what stage of trial the
information should be collected; therefore, the case does not support I-CA’s position that
discovery of financial information should be delayed until after the jury has returned a
verdict with punitive damages findings.
I-CA also cites Kerner v. Superior Court (2012) 206 Cal.App.4th 84, 119 (Kerner)
for the proposition that “[p]retrial discovery of a defendant’s financial condition in
connection with a claim for punitive damages is prohibited absent a court order
permitting such discovery.” This is accurate, but does not explain why I-CA did not seek

6 The parties’ stipulation that evidence of profit and financial condition would be
presented after a finding of malice, oppression or fraud, does not change the result. The
parties’ stipulation does not purport to confer authority upon the court to compel Plasgad
to produce documents located in Israel.

26
such an order prior to trial. As explained in Kerner, a plaintiff who believes that there is
a substantial probability that the plaintiff will prevail on its punitive damages claim must
seek such a court order in order to obtain the supporting information. Civil Code section
3295, subdivision (c), provides:
“No pretrial discovery by the plaintiff shall be permitted with respect
to the evidence referred to in paragraphs (1) and (2) of subdivision (a)
unless the court enters an order permitting such discovery pursuant to this
subdivision. . . . Upon motion by the plaintiff supported by appropriate
affidavits and after a hearing, if the court deems a hearing to be necessary,
the court may at any time enter an order permitting the discovery otherwise
prohibited by this subdivision if the court finds, on the basis of the
supporting and opposing affidavits presented, that the plaintiff has
established that there is a substantial probability that the plaintiff will
prevail on the claim pursuant to Section 3294.”7

Thus, the statute makes it clear that a party desiring discovery of a defendant’s
financial information must bring a motion in order to obtain such information. Then, the
trial court must determine whether the plaintiff has established a “substantial probability”
of prevailing on the claim for punitive damages. (Civ. Code § 3295, subd. (c).) “In this
context, a ‘substantial probability’ of prevailing on a claim for punitive damages means
that it is ‘very likely’ that the plaintiff will prevail on such a claim or there is a ‘“strong
likelihood”’ that the plaintiff will prevail on such a claim.” (Kerner, supra, 206
Cal.App.4th at p. 120.)
In Kerner, the Court of Appeal determined that the trial court erred in granting the
motion for pretrial discovery regarding financial information because the plaintiff did not
have a substantial probability of prevailing on his claim for punitive damages. The
punitive damage claim was based on the defendants’ efforts to encourage the city
attorney to prosecute the plaintiff for domestic violence. Those acts were privileged
under Civil Code section 47, subdivision (b), therefore the trial court erred in considering

7 Paragraphs (1) and (2) of Civil Code section 3295, subdivision (a), refer to
evidence of profits gained through wrongful conduct and evidence of the defendant’s
financial condition.

27
them in support of its finding that there was a substantial probability that the plaintiff
would prevail on his claim for punitive damages. (Kerner, supra, 206 Cal.App.4th at pp.
121-122.)
I-CA fails to explain why it did not bring a motion for pretrial discovery of
financial information, as the plaintiff in Kerner did. No such motion was made until after
phase I of trial, at which time the trial judge felt that it was not only improper, it was too
late.
Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597 (Issod), does not suggest
otherwise. There, an individual diamond dealer, whose place of business was in
Los Angeles, was ordered to produce records of his net worth in court following a trial in
which the diamond dealer was found liable for fraud. The diamond dealer objected that
such documents had not been requested during discovery, nor subpoenaed for trial. The
trial court overruled those objections. (Id. at pp. 603-604.) On appeal, the appellate court
rejected the defendant’s argument that plaintiff’s failure to conduct pretrial discovery
precluded the plaintiff from obtaining a court order requiring the defendant to produce his
financial records at trial. (Id. at p. 609.) The court held: “We see no problem with a trial
court, in its discretion, ordering a defendant to produce evidence of his or her financial
condition following a determination of the defendant’s liability for punitive damages.”
(Ibid.)
The Issod court’s holding that a trial court, in its discretion, may order a defendant
to produce financial records after trial, does not preclude a trial court from determining,
in its discretion, that such an order is inappropriate. This is especially true where, as
here, the defendant in question is a foreign corporation, the documents requested were
overly broad, and the matter has been pending for almost five years. Under the
circumstances, we find no abuse of discretion in the trial court’s decision that the
discovery request came too late.
2. No error in excluding the Dun & Bradstreet report
I-CA next argues that the trial court abused its discretion in excluding a properly
authenticated D&B report showing that Plasgad had a $15.6 million net worth.

28
 a. The trial court’s rationale
As discussed above, this issue came before the trial court in the form of an
ex parte application, filed by Plasgad, seeking an order excluding the documents of I-
CA’s retained expert, David J. Weiner, as to the net worth and/or financial condition of
Plasgad. Plasgad argued that the documents were inadmissible hearsay and were an
improper basis for any award of punitive damages. Mr. Weiner’s testimony was based
solely on a D&B report concerning Plasgad.
The trial court granted Plasgad’s ex parte application, finding that the D&B report
contained “hearsay within hearsay.” The first layer of hearsay constituted the financial
information supposedly provided by “Yossi Shemer General Manager” (Shemer) of
Plasgad. The trial court rejected I-CA’s argument that the party-admission exception to
hearsay applied.8 The court described I-CA’s claim as “tenuous.” The court explained
that use of the party-admission exception requires an examination of the agent’s authority
to make the statement, the nature of the statement in relation to the authority, and the
relevance or purpose of the statement. This analysis had not been carried out. Instead, I-
CA provided only “a few sentences within the D&B Report which indicate an interview
of someone apparently believed to be ‘Yossi Shemer[,] General Manager[,’] by one or
more unidentified persons who presumably work for D&B . . . . The D&B Report also
indicates that ‘Fin[ancial] statements for [2010] were shown to D&B economists.’” The
trial court determined that I-CA had not adequately shown the elements of an authorized
admission.9

8 Under Evidence Code section 1222, an authorized admission is a statement “made
by a person authorized by the party to make a statement or statements for him concerning
the subject matter of the statement.”

9 I-CA provided a declaration of Duane Deitrich, an employee of D&B “in the
position of Project Director-National Customer Relations.” Deitrich declared that the
statements in the D&B report were made “at or near the time of the occurrence . . . by . . .
a person with knowledge of those matters”; “[w]ere kept in the course of regularly
conducted business activity”; “[w]ere made by the said business activity as a regular
practice”; and “[i]f not original records, are duplicates of original records.” The trial

29
 The second layer of hearsay was the “out-of-court assertions of unnamed D&B
economists,” which posed “serious evidentiary problems.” I-CA had failed to provide
any competent evidence establishing the trustworthiness of the method, source, and
preparation of the D&B report. As such, the second layer of hearsay could not qualify for
the business records exception.
The trial court concluded that “the problems faced by [I-CA] are numerous.” The
court summarized its concerns as follows:
“For instance, the telephonic interview was with someone who may
have purported to have been Mr. Shemer, and [I-CA] has failed to show
that those conducting the interview, whoever they might be, could, if
necessary, actually identify the purported caller. In addition, there is a
failure to identify those persons who conducted the interview and their
qualifications, as well as a failure to demonstrate that the information
memorialized by the interviewer(s) was accurately memorialized and
communicated. There is also the vague reference to the ‘showing’ of the
financial statements to the unidentified ‘economists.’ The court is unable to
determine if the financial information set forth in the D&B Report was
based upon the information in the telephonic interview, on the financials
apparently ‘shown,’ to a combination of the above, or upon D&B’s
adjustment of the information it did receive from other unidentified and
undisclosed sources. In summary, there are just too many glaring
deficiencies for this court to find the source, manner and method of
preparation to be trustworthy.”

Having found the D&B report to be inadmissible hearsay, the trial court next
addressed the question of whether I-CA’s expert could still rely on that report in
rendering his opinion. The trial court determined that he could not. While an expert may
rely on inadmissible matter in forming an opinion, that matter is admissible only to
explain the basis for the witness’s testimony. (Citing People v. Gardeley (1996) 14
Cal.4th 605, 612 (Gardeley).) However, the expert may not serve as a mere conduit for
the admission of otherwise inadmissible hearsay. (Citing People v. Coleman (1985) 38
Cal.3d 69, 92, disapproved on other grounds in People v. Riccardi (2012) 54 Cal.4th

court found that this declaration was “not in proper form” and “cannot authenticate the
underlying information or properly establish the document as a business record.”

30
758.) Here, Mr. Weiner’s testimony regarding the net worth of Plasgad was “derived
directly, and apparently solely from the D&B Report.” The trial court concluded,
“[b]ecause Mr. Weiner has no other competent basis to testify about Plasgad’s net worth
or financial condition, any testimony on those subjects would result in the inadmissible
D&B Report being introduced to the jury through [I-CA’s] expert. This is precisely what
the law does not allow.”
b. No abuse of discretion occurred
I-CA argues that it is well settled that an expert may rely on reports and market
data to establish a company’s valuation. I-CA first points to the Law Revision
Commission Comments to section 801 of the Evidence Code, which states “[a]n expert
on the valuation of real or personal property . . . may rely on inquiries made of others,
commercial reports, market quotations, and relevant sales known to the witness.”10
The trial court acknowledged that “[a] qualified expert may fortify his opinion by
reference to materials . . . prepared by similarly qualified experts.” The trial court was
aware that just because “such independent information/opinions are not themselves
admissible does not prevent a testifying expert from relying on them as a basis for his
own opinion . . . .”
However, the trial court noted that there are limits to a testifying expert’s ability to
reference inadmissible hearsay. The trial court relied on Gardeley, in which the Supreme
Court set forth a thorough discussion of the circumstances under which a testifying expert
may rely on inadmissible evidence. The Gardeley court acknowledged that “[e]xpert
testimony may . . . be premised on material that is not admitted into evidence so long as it
is material of a type that is reasonably relied upon by experts in the particular field in
forming their opinions.” (Gardeley, supra, 14 Cal.4th at p. 618.) However, the Gardeley
court emphasized that “a witness’s on-the-record recitation of sources relied on for an
expert opinion does not transform inadmissible matter into ‘independent proof’ of any
fact. [Citations.]” (Id. at p. 619.) A trial court has discretion “‘to weigh the probative

10 Section 801 of the Evidence Code concerns expert witness opinion testimony.

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value of inadmissible evidence relied upon by an expert witness . . . against the risk that
the jury might improperly consider it as independent proof of the facts recited therein.’
[Citation.]” (Ibid.)
This is exactly the risk that the trial court considered when it made its ruling
excluding the D&B report. The trial court stated, “Mr. Weiner cannot, as [I-CA] seeks,
serve as a mere conduit for the introduction of otherwise inadmissible hearsay. Here, all
of Mr. Weiner’s knowledge with regard to Plasgad’s net worth or financial condition is
derived directly, and apparently solely from the D&B Report.” The trial court soundly
determined that, because the D&B report was the only evidence of Plasgad’s net worth,
the jury would use the information contained in the report as independent evidence of
Plasgad’s net worth. Using its discretion to balance the value of the hearsay against this
risk, the trial court excluded the evidence.
I-CA discusses United States v. Beecroft (9th Cir. 1979) 608 F.2d 753 (Beecroft),
in which the Ninth Circuit specifically discussed the admissibility of D&B reports. In
Beecroft, a D&B report was admitted into evidence. However, it was not hearsay
because it was “not introduced to prove the financial condition of [the defendant’s
company].” (Id. at p. 760.) Instead, it was “part of the circumstantial evidence
illustrating [a corporate officer’s] awareness of the misrepresentations made to inventors
via the Dun and Bradstreet report.” (Id. at p, 761.) Thus, the Beecroft case does not
suggest that the trial court abused its discretion in this matter.11

11 I-CA argues that the Beecroft court specifically determined that the D&B report
met the requirements of the business records exception to the hearsay rule. (See Evid.
Code, § 1340.) In discussing whether a specific signature on the D&B report was
hearsay, the Beecroft court stated that even if it were, the elements of the business records
exception were met because “(1) the report is timely made in the course of a regularly
conducted business activity, and (2) there is no indication of untrustworthiness.”
(Beecroft, supra, 608 F.2d at p. 761.)
The rationale set forth in Beecroft does not apply to the report made in this case.
As explained above, the trial court found numerous indicia of untrustworthiness in this
particular D&B report. In addition to the deficiencies set forth above, the court found it
“curious” that “Mr. Shemer, who was present in court and certainly was aware of the
verdict and the fact that the jury would be returning for Phase II, would, just two weeks

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 I-CA also argues that Shemer’s out-of-court statements were party admissions.
I-CA cites Pleasant Hill v. First Baptist Church (1969) 1 Cal.App.3d 384, 418 (Pleasant
Hill) for the proposition that “a party’s extrajudicial statement as to value is admissible as
substantive proof where value is in issue. [Citations.]” The statement at issue in
Pleasant Hill was an allegation in an original verified pleading of $15,000 in damages --
a number which was later changed to $100,000. (Id. at p. 417.) The case does not
suggest that a trial court may not, in its discretion, exclude statements that are “hearsay
within hearsay.” In addition, the Pleasant Hill court pointed out that such prior
inconsistent statements are admissible where “the person whose statement is to be used is
a witness and has an opportunity to explain or to deny the statement. [Citation.]” (Id. at
p. 418.) Here, the trial court was skeptical that the information in the D&B report was
truly provided by Shemer; in addition, the court could not compel Shemer to appear at
trial to be questioned about those statements. Thus, Pleasant Hill does not assist I-CA.12
Under the authority set forth in Gardeley, the trial court’s evidentiary ruling
prohibiting use of the D&B report by I-CA’s expert was not an abuse of the trial court’s
discretion.

prior to commencement of Phase II, freely share non-public financial information with
D&B knowing that such information would then be available to the public.” This added
to the trial court’s concern that the identities and qualifications of Mr. Shemer’s supposed
interviewers were not known, nor was it known how they identified the purported
interviewee. In addition to these concerns, the court could not ascertain the methods used
for ultimately determining the financial status of Plasgad. Thus, while some D&B
reports may fall under the business records exception to the hearsay rule, the trial court
found that this one had too many indicia of untrustworthiness to fit under that exception.
This decision, which was carefully considered and documented, was not an abuse of
discretion under the circumstances of this case.

12 The other cases cited by I-CA on the doctrine of party admission similarly do not
address the double hearsay situation involved here. (Bonebrake v. McCormick (1950) 35
Cal.2d 16, 18-19; Sill Properties, Inc. v. CMAG, Inc. (1963) 219 Cal.App.2d 42, 54-55;
Bank of Italy Nat’l Trust & Sav. Asso. v. Johnson (1935) 7 Cal.App.2d 463, 465; Jazayeri
v. Mao (2009) 174 Cal.App.4th 301, 316.)

33
 D. The prevailing party determination between I-CA and Plasgad
I-CA next argues that the trial court’s determination that Plasgad was the
prevailing party as between I-CA and Plasgad was error. However, I-CA’s position is
premised on two arguments that we have already rejected.
First, I-CA argues that if it is entitled to joint and several liability against the two
defendants, then it should be the prevailing party because, without prejudgment interest
on Plasgad’s claim, it recovered $450,275.25 against Plasgad’s $327,396.96. We have
determined that the trial court correctly declined to impose joint and several liability,
therefore we decline to discuss this argument further.
I-CA next argues that if this court grants reversal of the nonsuit as to its punitive
damages claim against Plasgad, there must be a redetermination of the prevailing party.
We have determined that the trial court did not err in granting nonsuit on the punitive
damages claim against Plasgad, therefore we also decline to discuss this argument.
II. Cross-appeal
A. Interference with contractual relations
Palram’s main argument in its cross-appeal is that substantial evidence does not
support the verdict against it on the tort of interference with contractual relations. Palram
argues that the only act that I-CA alleged in this cause of action was that Palram
supposedly induced a breach of contract by Plasgad. Palram points out that I-CA gave up
its claim against Plasgad for breach of contract and never proved any such breach.
Instead, the only evidence was that Plasgad terminated the contract with six months
notice, as called for in the contract. In addition, Plasgad continued to fulfill its
obligations under the contract during the six months after its notice of termination,
despite I-CA’s refusal to pay for Plasgad’s products.
1. Applicable law
“[A] stranger to a contract may be liable in tort for intentionally interfering with
the performance of the contract.” (Pacific Gas & Electric Co. v. Bear Stearns & Co.
(1990) 50 Cal.3d 1118, 1126 (PG&E).) The elements of the tort are: “(1) a valid contact
between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3)

34
defendant’s intentional acts designed to induce a breach or disruption of the contractual
relationship; (4) actual breach or disruption of the contractual relationship; and (5)
resulting damage. [Citations.]” (Ibid.)
The PG&E court addressed the question of “whether inducing a party to a contract
to seek to terminate the contract according to its terms is ever actionable interference with
contractual or prospective economic relations.” (PG&E, supra, 50 Cal.3d at p. 1126.)
The court concluded that “it may be actionable to induce a party to a contract to terminate
the contract according to its terms.” (Id. at p. 1127.) The court explained, “it is the
contractual relationship, not any term of the contract, which is protected against outside
interference.” (Ibid.) Even an at-will contract is subject to a claim for interference. Just
because the contract is “‘“at the will of the parties, respectively does not make it one at
the will of others.”’ [Citations.]” (Ibid.) Thus, “‘[t]he actionable wrong lies in the
inducement to breach the contract or to sever the relationship, not in the kind of contract
or relationship so disrupted, whether it is written or oral, enforceable or not enforceable.’
[Citations.]” (Ibid.)
In addition, “a person is not justified in inducing a breach of contract simply
because he is in competition with one of the parties to the contract and seeks to further
his own economic advantage at the expense of the other. [Citation.]” (Imperial Ice Co.
v. Rossier (1941) 18 Cal.2d 33, 36.) This is because, “[w]hatever interest society has in
encouraging free and open competition by means not in themselves unlawful, contractual
stability is generally accepted as of greater importance than competitive freedom.”
(Ibid.) A party may not, “under the guise of competition actively and affirmatively
induce the breach of a competitor’s contract.” (Id. at p. 37.)
2. Substantial evidence supports the jury’s finding of liability
The evidence in the record supports the jury’s finding of liability for intentional
interference with contractual relations.
Palram does not dispute the existence of a contract between Plasgad and I-CA.
And while Palram’s president testified that he did not know that Plasgad had a contract
with I-CA, there was other evidence in the record suggesting that Palram knew of I-CA’s

35
contract with Plasgad. Even if the jury believed that Palram’s president did not have
knowledge of the written contract between I-CA and Plasgad, the jury was justified in
finding that Palram’s executives at least knew of the contractual relationship between I-
CA and Plasgad. There was evidence that Palram knew that I-CA was the exclusive
distributor of the plastic closure strips in North America.
Next, the jury was required to find intentional acts designed to induce a disruption
of the contractual relationship between I-CA and Plasgad. There was evidence that
Plasgad raised its prices in December 2005, and while Palram ultimately agreed to the
price increase, it placed no further orders for the product between January and August of
2006.
When Aloni confronted Palram regarding his concern that there were no orders
placed during the first half of 2006, Palram stated that it was looking for a secondary
supplier for the strips. This statement was made in spite of Palram’s alleged knowledge
that Plasgad had a patent on the product and Palram could not purchase it from anyone
else.
In late 2006, within a few days of each other, both Plasgad and Palram notified
I-CA that each was terminating its contractual relationship with I-CA. Plasgad asserted
that I-CA had not achieved the minimum level of sales required to retain the right to sell
the products. However, there was evidence that no sales goals had ever been discussed
between the parties. In addition, there was evidence that the sales of the plastic closure
strips had been successful.
As early as February 2007, Plasgad and Palram were discussing working directly
with each other regarding the sale of the plastic closure strips.
Taken together, the jury could reasonably have found that Palram intentionally
interfered with I-CA’s relationship with Plasgad. First, while Palram and Plasgad never
had a relationship with each other prior to the events described above, the jury could infer
that they subsequently formed such a relationship behind I-CA’s back with the intent of
keeping I-CA out of the relationship. The jury could also justifiably find that this plan
was instigated by Palram, since as early as 2005 Plasgad notified I-CA that Palram was

36
attempting to contact Plasgad directly, against Plasgad’s wishes and in violation of the
understanding that Plasgad had with I-CA. The jury could certainly infer that Palram
continued its efforts to get to Plasgad directly, in spite of both Plasgad’s and I-CA’s
direct communications to Palram that it should not contact Plasgad directly, but should go
through I-CA.
Furthermore, the jury could have concluded that both Palram and Plasgad
fabricated their reasons for terminating their contractual relationships with I-CA. In
particular, Plasgad referred to allegedly nonexistent sales goals. The jury was entitled to
infer that this pretense masked Plasgad’s real reason for terminating its relationship with
I-CA: Palram had induced it to do so.
The jury is entitled “to make any logical and reasonable deduction” from the
evidence before it. (Juchert v. California Water Service Co. (1940) 16 Cal.2d 500, 507-
508.) Here, the jury was entitled to infer that Palram engaged in intentional acts designed
to disrupt the relationship between I-CA and Plasgad -- and in fact, successfully carried
out such a disruption. “[T]he jury is the exclusive judge of the weight and value of the
inference that may be drawn by [the evidence]; . . . [t]he fact that some inference other
than that which has been drawn by a jury may appear to an appellate tribunal to be the
more reasonable, affords no sufficient reason for disturbing the inference in question.
[Citation.]” (Id. at p. 508.)
Because there is sufficient evidence to support I-CA’s claim against Palram for
intentional interference with its contract with Plasgad, we decline to disturb the jury’s
finding of liability on this issue.
3. The cases cited by Palram do not mandate reversal in this case
Palram cites several cases suggesting that engaging in lawful competition does not
amount to interference with contractual relations. However, as set forth below, the cases
do not convince us that the jury verdict in this case must be reversed.
First, Palram relies upon Augustine v. Trucco (1954) 124 Cal.App.2d 229
(Augustine). In Augustine, the plaintiff was a real estate broker who had a written
agreement with the sellers of real property which entitled him to a commission upon sale.

37
The agreement expired, but the plaintiff contended that it was orally extended. The
plaintiff found a buyer, but the sellers refused an offer from the buyer at that time. Two
years later, however, the sellers sold their property to the same buyer, who had been
found by another real estate firm.
The trial court found a nonsuit as to the plaintiff’s claims against the second real
estate firm for inducing breach of contract. Significantly, the court found that after the
written contract between the plaintiff and the sellers expired, the plaintiff had no contract
with the sellers. (Augustine, supra, 124 Cal.App.2d at p. 246.) Although he continued to
attempt to procure buyers for the property, “[h]e was acting as a mere volunteer.” (Id. at
p. 237.) Thus, at the time of the alleged interference, there was no contractual
relationship between the plaintiff and the sellers in which the second real estate company
could interfere. In the matter before us, the evidence showed that such a contractual
relationship existed between I-CA and Plasgad at the time of Palram’s interference.
In addition, there was no allegation in the complaint that the second real estate
firm “intentionally or actively induced or persuaded [the sellers] to breach any contract
with plaintiff.” (Augustine, supra, 124 Cal.App.2d at p. 246.) In contrast, here, there is
evidence that Palram did induce Plasgad to end its contractual relationship with I-CA.
Thus, the Augustine case is not persuasive.
Next, Palram cites PMC, Inc. v. Saban Entertainment, Inc. (1996) 45 Cal.App.4th
579 (PMC), overruled on other grounds in Korea Supply Co. v. Lockheed Martin Corp.
(2003) 29 Cal.4th 1134, 1159. The case concerned a manufacturer’s action against an
entertainment company. The manufacturer was bidding to obtain exclusive rights to
market and manufacture items using the name of a children’s television series, but the
entertainment company ultimately entered into a contract with the manufacturer’s
competitor. The manufacturer brought causes of action for breach of contract against the
entertainment company and interference with contractual and prospective economic
advantage against the competitor.
In rejecting the manufacturer’s cause of action for interference with prospective
economic advantage, the PMC court made reference to the “competition privilege.”

38
(PMC, supra, 45 Cal.App.4th at p. 602.) Under that privilege, “‘a competitor is free to
divert business to himself as long as he uses fair and reasonable means.’ [Citation.]” (Id.
at p. 603.) In that case, there was no evidence that the competitor had engaged in any
wrongful or illegitimate conduct, but was “simply engaging in hard-nosed and ultimately
successful bargaining for the exclusive license also sought by [the plaintiff
manufacturer].” (Id. at p. 606.) Significantly, the PMC court did not apply the
competition privilege in its discussion of the tort of interference with contractual relations
-- instead, it found that “no enforceable contract existed.” (Ibid.) Under the
circumstances, we are not convinced that the competition privilege is properly applied
under the facts before us.
Finally, Palram cites Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village
Square Venture Partners (1997) 52 Cal.App.4th 867 (Bed, Bath & Beyond). The case
involves a factual situation very similar to that found in PMC. The plaintiff negotiated a
lease of retail space, the terms of which were reduced to a written agreement which was
signed by the plaintiff but not the shopping center. Soon thereafter, the space was leased
to a competitor of the plaintiff. The plaintiff filed an action for breach of contract against
the shopping center and interference with contractual relations and prospective economic
advantage against the competitor. As in PMC, the action for interference with
contractual relations was summarily adjudicated in the defendant’s favor on the ground
that no enforceable contract existed. The cause of action for interference with
prospective economic advantage was defeated by the fair competition privilege. Instead,
the defendant merely competed successfully for a lease of the premises by offering a
better deal.
For the same reasons discussed as to PMC, the Bed, Bath & Beyond case does not
convince us that reversal is required in this matter.

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 DISPOSITION
The judgment is affirmed. Each side to bear their own costs of appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

____________________________, J.
CHAVEZ

We concur:

__________________________, P. J.
BOREN

__________________________, J.
HOFFSTADT

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