DMF Trucking v. Colmac Energy CA4/1

Filed 6/3/15 DMF Trucking v. Colmac Energy CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

DMF TRUCKING, D066969

Plaintiff and Appellant,

v. (Super. Ct. No. INC10011063)

COLMAC ENERGY, INC. et al.,

Defendants and Appellants.

APPEAL from a judgment and orders of the Superior Court of Riverside County,

Harold W. Hopp, Judge. Affirmed in part and dismissed in part.

Graobaty & Pitet, Michael J. Grobaty, Christopher L. Pitet, Jacqueline A. Turner;

Snell & Wilmer, Richard A. Derevan and Todd E. Lundell for Defendants and

Appellants.

Law Office of Reginald E. Alberts, Reginald E. Alberts; Law office of Eric C.

Alberts and Eric C. Alberts for Plaintiff and Appellant.
 Defendants and Appellants Colmac Energy, Inc. and Paula Bates, at all times

relevant an employee and the fuel manager of Colmac (sometimes collectively Colmac),

appeal (1) a judgment in favor of plaintiff and appellant DMF Trucking (DMF) and (2)

an order denying Colmac's motion for judgment notwithstanding the verdict (JNOV).

DMF separately appeals the court's order partially granting Colmac's motion for new trial

on damages only in connection with DMF's defamation cause of action.

From 1991 until June 2010, DMF coordinated deliveries of wood chips to

Colmac's clean-energy plant located in Mecca, California. Colmac burned the wood

chips to create electrical energy that it then sold to a third-party utility. DMF worked

exclusively for Colmac. Over the 18 or so years DMF delivered wood chips to Colmac's

plant, DMF's operations grew substantially. In 2010, when the instant action arose, about

30 or 40 drivers worked as independent contractors for DMF hauling wood chips to

Colmac's plant. Some of those drivers had hauled for DMF for more than 15 years and

several for more than a decade. The rate paid by Colmac for delivery of the wood chips

depended on the weight of the wood chips, their quality and the distance between

Colmac's plant and the various yards where the wood chips were picked up.

Of the millions of dollars Colmac paid DMF each year, DMF kept about 15

percent as earned "broker fees." DMF paid the remaining 85 percent or so to its drivers.

DMF alone was responsible for screening, hiring, training, dispatching, disciplining, and

paying its drivers.

The instant dispute arose in June 2010, after Colmac terminated the services

contract of DMF as a result of DMF's alleged failure to pay the drivers the rates Colmac

believed they should be paid under the party's long-term services contract. The same day

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Colmac terminated the contract with DMF, Bates prepared a notice of termination and

posted it in Colmac's "scale house" where it would be seen by the DMF drivers hauling

wood chips, who came and went several times each day. The notice also provided that

Colmac would be willing to pay the DMF drivers directly and that a meeting for DMF

drivers would take place the next day, a Saturday, to answer any questions.

Every one of the drivers hauling for DMF attended the meeting arranged by

Colmac. During the meeting, Bates told the drivers, "There was a discrepancy in the

rates that DMF was paying" them. Bates also provided each driver with a "rate sheet"

that showed the rates Colmac believed DMF should have been paying the drivers all

along. Bates, on behalf of Colmac, promised the drivers that Colmac would pay them

those higher rates going forward. Every one of DMF's drivers stopped working for DMF

that same day and by the following Monday, every one of those drivers was hauling

directly for Colmac.

DMF sued Colmac and Bates in late 2010 for defamation and interference with

prospective economic relations, among other causes of action, after DMF was unable to

hire drivers to fulfill other contracts between it and one or more third parties. The

operative complaint alleged the statement by Bates to the DMF drivers about a

"discrepancy" in what they were being paid by DMF was slanderous per se because the

words, in context, charged DMF "with a crime, i.e., theft and/or embezzlement, and/or

they directly injured DMF Trucking in respect to its profession, trade or business of

brokering truck deliveries for and behalf of their sub-haulers for their and Colmac's

mutual benefit."

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 As relevant here, the jury found that Bates's "discrepancy" statement constituted

defamation per se. The jury awarded DMF $1.75 million in actual damages, including

$400,000 for economic harm and $1.35 million for reputation harm. The jury also found

by clear and convincing evidence that Bates, in the course and scope of her employment,

acted with malice, oppression or fraud in making the statement and awarded DMF

$100,000 in punitive damages. Further, the jury found Colmac interfered with the

economic relationship between DMF and its drivers and awarded DMF $400,000 in

damages and $100,000 in punitives.

Following the verdict, Colmac filed its JNOV and new trial motions. The court

granted the JNOV motion with respect to the $100,000 punitive damages award against

Bates individually but denied that motion in all other respects. As particularly relevant to

this appeal, the court also conditionally granted Colmac's new trial motion with respect to

the jury's award of defamation damages. The court, however, ruled it would deny the

new trial motion if DMF accepted a remittitur of damages to $500,000 ($400,000 in

economic harm and $100,000 in punitives). DMF refused.

During the pendency of this appeal, we requested supplemental briefing from the

parties regarding our jurisdiction to consider, on the one hand, the appeal of Colmac to

the judgment and to the order denying the JNOV, and on the other hand, the protective

appeal of DMF to the order granting Colmac's new trial motion on the issue of

defamation damages. (See, e.g., Pacific Corporate Group Holdings, LLC v. Keck (2014)

232 Cal.App.4th 294, 302 (Keck); Beavers v. Allstate Ins. Co. (1990) 225 Cal.App.3d

310, 329 (Beavers).)

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 As we explain, because we affirm the court's order granting Colmac's new trial

motion, we conclude we lack jurisdiction to consider Colmac's appeal to the judgment.

(See Keck, supra, 232 Cal.App.4th at pp. 301-302.) However, because the order denying

the JNOV is a separate appealable order (Code Civ. Proc., § 904.1, subd. (a)(4)), we

further conclude that we have jurisdiction to consider Colmac's appeal of that order

which, as we explain, we affirm.

BACKGROUND

A. Factual Summary

In 1980, Danny Stouffer and his wife, Susan Stouffer, founded DMF. Danny died

in September 2009 after a prolonged illness. Susan testified when founded, DMF owned

two trucks, one of which Danny himself drove, and employed two owner-operators.

Susan did the billing for DMF. According to Susan, Danny always negotiated the rates

the drivers received to haul loads. Before DMF began to haul loads for Colmac, DMF

hauled loads for another client for at least 10 years.

In or around 1993, DMF began hauling wood chips to Colmac's plant. At the

time, about 10 owner-operators worked for DMF. Danny alone was responsible for

negotiating the terms of the contract with Colmac. Danny's contact at Colmac was Bates.

Bates testified she met Danny just after the Colmac plant opened, when Danny

was working for a third-party supplier under a written contract with Colmac. According

to Bates, initially all suppliers of materials were required to arrange their own

transportation of materials to the plant. In late 1991 or early 1992, Danny proposed to

Bates that Colmac pay Danny directly if he found the supplier and arranged for the

transportation of wood chips from the supplier to Colmac. This arrangement proved

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mutually beneficial after Danny located suppliers and arranged for the delivery of wood

chips to Colmac's plant.

Susan testified that the negotiations between Danny and Bates led to a written

services contract between DMF and Colmac. Susan saw the contract. However, in 1994

Danny's car was stolen. The contract was inside Danny's briefcase, which was inside the

car. Neither the car nor the briefcase was ever recovered. Susan testified she

subsequently asked Bates for a copy of the written contract, but it was never provided.

Bates, however, testified there was an oral, but not a written, contract between DMF and

Colmac with respect to the supply of wood chips. Bates noted there was a written

contract between Colmac and DMF to haul ash.

Susan testified that drivers hauling wood chips for DMF were provided a log. The

log required the driver to provide the date; a ticket number that the driver obtained from

Colmac when the driver delivered the wood chips to the plant; the yard where the driver

picked up the wood chips; the weight (in tons) of the wood chips hauled, which was

determined at Colmac's "scale house" when the driver unloaded the wood chips; and the

rate DMF paid its drivers. According to Susan, DMF and DMF alone, through Danny,

set the rates paid to the drivers. Based on all these factors, DMF paid its drivers

bimonthly.

According to Susan, Danny was responsible for making sure DMF obtained the

right size and quality of wood chips required by Colmac. To do this, Danny would often

visit various "wood yards." Sometimes Bates accompanied Danny on these visits.

Danny was always looking for new opportunities to supply wood chips to Colmac.

For example, according to Susan, when a developer sought to build houses on an orange

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grove, Danny would negotiate with the developer and turn the grove into wood chips to

supply Colmac. Over the years, Danny grew DMF's business of supplying or "brokering"

wood chips for Colmac. By 2010, Susan estimated that DMF had at least 30 drivers

hauling wood chips to the Colmac plant. Record evidence showed that from 1998 until

June 2010, Colmac paid DMF a little more than $36 million, or about $3 million

annually.

As new suppliers were added by DMF, new rates had to be set for hauling the

wood chips to Colmac. Susan testified that Danny, and Danny alone, set "all" the

trucking rates used by DMF drivers to haul wood chips to Colmac and that Colmac at no

time set those rates. Susan also testified that over the course of the 18-year relationship

between DMF and Colmac, not once while the contract was in place did Colmac ever pay

the haulers working for DMF.

Moreover, every two weeks Colmac sent DMF a single check for the delivery of

wood chips and for other services DMF provided, including the delivery of ash. Thus,

DMF was not given a check for brokering services and a separate check for its drivers.

Susan testified that Danny also set the rates for "fuel surcharges" that DMF paid

the drivers. After Danny died, Susan testified DMF did not change its billing practices,

or the rates it paid drivers or the rates it charged Colmac.

Kristie Walker, the daughter of Susan and Danny, also testified at the trial. Kristie

started working for DMF in 1993. As DMF grew, Kristie's job responsibilities increased

and she ultimately became office manager of DMF. As such, Kristie was responsible for

dispatching trucks to the various yards, hiring and firing drivers, and mapping out the

drivers' routes.

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 Kristie testified that since 1993, DMF hauled only for Colmac. According to

Kristie, Danny, on behalf of DMF, and Bates, on behalf of Colmac, negotiated the rates

Colmac would pay DMF. However, Danny alone set the rate DMF paid its drivers for

hauling the wood chips.

As DMF's business expanded, Kristie hired new drivers to haul wood chips based

in part on the recommendation of DMF drivers then hauling for the business. Before a

driver was hired, Kristie testified she checked his or her references and made sure the

driver had the proper equipment, a valid driver's license, insurance, and a printout

showing his or her driving record. The drivers also were required to name DMF as an

additional insured on their insurance policies. Colmac had no input as to who DMF hired

to haul wood chips to Colmac. Colmac also had no input on driver discipline issues.

Kristie testified DMF set the routes the drivers used when they made pickups and

deliveries of wood chips. Kristie testified it was important for the drivers to use certain

routes because, in some cases, drivers were not allowed on certain roads and/or to cross

certain bridges due to weight restrictions and similar requirements.

DMF occasionally held meetings for the drivers but, according to Kristie, more

often DMF would issue bulletins for its drivers. However, when meetings were held,

Kristie, Susan, Danny and the drivers would attend but no one from Colmac attended or

was invited to attend.

After Danny became ill, Kristie gave Colmac a "driver call sheet" that included the

names of the DMF drivers and their telephone numbers. Until Danny's death in

September 2009, according to Kristie the relationship between DMF and Colmac had

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always been "[g]reat." However, after Danny's death, that relationship began to change

despite the fact Kristie and Susan operated DMF the same as when Danny had been alive.

In May 2010, Bates asked Kristie and Susan to attend a meeting to make sure

everyone was "on the same page." In addition to Bates, Colmac's plant manager attended

the meeting. During the meeting, they discussed the "structure" of DMF. Kristie

characterized the tone of the meeting as "ugly," as Bates was upset over some incident

that occurred when Kristie traveled to a wood yard. According to Susan, Bates was

"yelling" and "beating on the table" during the meeting. Kristie described the meeting as

"not productive."

After the meeting, Colmac's statements to DMF continued to include the number

of daily loads DMF hauled to the plant. However, unlike the statements in the past,

Colmac began to exclude from the DMF statements the total number of loads Colmac

received on a daily basis. Kristie testified Colmac deleted this information because one

of the issues Kristie discussed at the May 2010 meeting was her view that Colmac was

cutting back DMF on the number of loads it hauled for Colmac. According to Kristie,

Bates responded at the May meeting by telling Kristie that she should focus on the loads

DMF was hauling, and not on the loads being hauled by other businesses.

In early June 2010, Bates called Kristie and asked that she attend a meeting at

Colmac. Bates told Kristie the purpose of the meeting was to discuss the fact that DMF

allegedly was not paying drivers "what she [i.e., Bates] told us [i.e., DMF] to pay the

drivers." Kristie responded that DMF alone set the rates it paid its drivers and that what

DMF paid the drivers was none of Colmac's "business." Bates in response hung up the

phone on Kristie.

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 A day or two before Colmac terminated the DMF service contract, Bates again

called Kristie to inform her Colmac's plant manager was going to be at Colmac's plant on

Friday, June 11, 2010. Bates asked Kristie to attend a meeting at Colmac that same day.

Because of Bates's behavior at the May 2010 meeting and the repercussions to DMF's

business that resulted from it, Kristie decided not to attend the June 11 meeting.

On June 11, Colmac notified DMF that effective that same day, Colmac was

terminating DMF's "freight services to the plant." Colmac based the termination on its

findings "regarding the payment of truck rates, fuel surcharges, minimum tonnages and

broker fees." Colmac further advised DMF that it would pay DMF's drivers directly for

deliveries from May 16 through May 31 and from June 1 through June 11, and that it

would pay DMF by "separate check" the broker fees it had earned during these same

periods. The notification was signed by Bates and by a vice-president of Colmac.

According to Kristie, this was the first time in the 18-year relationship between DMF and

Colmac that Colmac had paid drivers hauling for DMF.

Because DMF since 1993 had worked exclusively for Colmac, Kristie

immediately attempted to find other hauling work for DMF and its drivers. Kristie

subsequently lined up other hauling work, including a contract with Gold Coast

Recycling. DMF was unable to perform that contract or any others, however, because,

according to Kristie, all of the truckers that hauled for DMF began working directly for

Colmac and because Kristie, despite her best efforts, was unable to find drivers willing to

work for DMF. Specifically, Kristie testified she called "all" of the truckers that

previously had worked for DMF and called various yards inquiring whether DMF could

use the yards' trucks for hauling, but none agreed to work for DMF.

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 Kristie testified she was unaware of any agreement between DMF and Colmac

requiring DMF to pay its drivers specific rates or amounts set by Colmac, including, for

example, with regard to a fuel surcharge that Colmac on occasion would pay when the

cost of fuel went up by a certain amount, or with regard to a minimum tonnage Colmac

paid because of concerns some of the loads were "light" because the wood chips were

dry.

Bates testified that from the "very beginning" of their relationship, she and Danny

agreed that Colmac would "dictate" the pay of the DMF drivers. As noted, Bates stated

that there was never a written contract between Colmac and DMF but that Danny gave

"his word" he would pay the DMF haulers the rates dictated by Colmac and set by Bates.

Bates first became aware that the drivers were not being paid what they should have been

paid per Colmac shortly before the proposed June 2010 meeting, when she reviewed

invoices provided by the drivers.

Specifically, Bates testified every "two to three years" Colmac would send a "rate

sheet" to DMF that in turn obligated DMF to pay its drivers the rates on the sheet set by

Colmac.1 Bates also testified that Danny agreed to pay DMF drivers 100 percent of the

fuel surcharge Colmac paid to DMF, which payment was included in the lump-sum

payment Colmac gave DMF every two weeks.

Bates testified that with respect to other haulers, Colmac did not specify how their

drivers should be paid because it was up to the suppliers to make that determination.

1 The record shows the rate sheet Colmac provided DMF in or about April or May
2006 was in effect when Colmac terminated the services contract with DMF in June
2010, more than four years after it was received by DMF.
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Bates testified Colmac's arrangement with DMF was unique or "different" in this respect,

as Colmac did have the authority to dictate what DMF paid its drivers.

Bates testified that after Danny died in 2009, Colmac did not have the "support in

the field" it once had when Danny was alive because he was always trying to find new

sources of wood supply for Colmac and to do so, he would visit yards and talk to people

several days each week. Although Bates preferred working with Danny, she testified she

did not have a problem working with Susan or Kristie.

In 2010, Colmac sought to sell its plant. Bates testified she wanted to continue

working at the plant after the sale. Bates recognized that as the "fuel manager" of the

plant, it was her job to bring in wood as cheaply as possible. With respect to the May

2010 meeting with Kristie and Susan, Bates denied the meeting became "heated" at any

point.

Bates testified that about a month after the May meeting, a driver for DMF

complained to a Colmac employee working in the scale house about his loads being

"light." The employee responded that to offset the light loads, Colmac paid the drivers

based on a 22-ton minimum. When the driver denied being paid a minimum, the Colmac

employee reviewed the driver's statement from DMF and determined the driver was not

in fact being paid the minimum, as Colmac believed was required under the oral

agreement between Bates (i.e., Colmac) and Danny (i.e., DMF).

Bates testified that in response to this information, she talked to other DMF

drivers, reviewed their statements and confirmed they too were not receiving what

Colmac dictated they should receive. As a result, Bates called Kristie and told her there

were "discrepancies" in what DMF was paying its drivers, not only with respect to the

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22-ton minimum, but also with respect to the fuel surcharges and the driver rates. Bates

asked Kristie to attend a meeting at the plant on Friday, June 11, 2010. When nobody

from DMF showed up for the Friday meeting, Bates testified she, on behalf of Colmac,

terminated the DMF services contract.

Bates testified she next drafted a notice to "All DMF drivers," dated June 11,

2010, informing them of the termination of the DMF services contract with Colmac. The

notice stated that Colmac would "begin to dispatch the trucks direct[ly]" and that if the

drivers were "interested in hauling direct[ly] for Colmac Energy, you will need to

complete the attached form and provide the necessary paperwork." The notice also

provided that Colmac would pay the drivers directly for loads hauled from May 16 to

May 31, 2010 and from June 1 to June 15, 2010. Finally, the notice provided that there

would be a meeting at Colmac's plant the following day, a Saturday, at 9:00 a.m. "to

answer any . . . questions"; that drivers should "try to attend" the meeting; and that

Colmac would "try to make the transition as quickly as possible."

Bates testified this was the first time Colmac had ever dispatched its "own" trucks,

but it was necessary to do so to ensure Colmac's wood supply was not disrupted.

Although Bates was prepared to call other drivers if the DMF drivers did not sign on with

Colmac, it was unnecessary to do so because all the DMF drivers ended up hauling

directly for Colmac.

At the Saturday meeting, the DMF drivers were required to sign a "sign in" sheet.

Although a few of the 29 drivers who signed in drove for other businesses, most of the

drivers worked only for DMF. Some of the DMF drivers also had their own companies

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and hired their own trucks to haul wood chips for DMF. Bates along with other Colmac

employees attended the meeting.

Before any of the drivers spoke or asked questions, Bates told them that "there was

a discrepancy in the rates that the drivers should have been paid" by DMF. During the

meeting, Bates handed the drivers a "rate sheet" showing what she and Colmac believed

DMF all along should have been paying the DMF drivers for hauling wood chips to the

plant.

Bates testified she never explained to the drivers what she meant by "discrepancy."

According to Bates, none of the drivers asked what she meant by "discrepancy." Bates

stated the drivers did not become upset about their pay until after the meeting.

Bates testified when she told the drivers there was a "discrepancy" in the rates they

were being paid by DMF, she did not tell them there were instances when DMF was in

fact paying them the "full" truck rate set by Colmac. In addition, when asked whether her

use of the word "discrepancy" suggested to the drivers they were being paid less than

what Colmac directed DMF to pay them, Bates testified that she did not tell the drivers

they were being paid less or more than required by Colmac and that the drivers "could

draw their own conclusions" regarding what she meant by the statement.

Bates admitted, however, that by giving the drivers the rate sheet and by using the

word "discrepancy," she and Colmac were essentially telling them they were being paid

less by DMF for hauling wood chips than what they should have received based on the

rates set by Colmac. Bates also admitted that cutting out DMF and directly hiring its

drivers saved Colmac money and that, regardless of what DMF was paying its drivers,

Colmac was not losing any money because Colmac always paid DMF the same rates.

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 Witness Gerald Moffatt testified in 2010 he was CEO and president of Rainbow

Environmental Service (Rainbow), a business located in Huntington Beach, California.

DMF acted as the broker and arranged to haul wood and other materials from Rainbow's

yard to Colmac. Moffatt testified that he knew Danny, Susan and Kristie and that he

never had any problems or issues with them or DMF, including in the 2009 time frame.

Moffatt also testified that DMF had a reputation of "mov[ing] quite a bit of material," but

that his company stopped using DMF after June 2010 because DMF no longer hauled to

Colmac's plant.

Witness Ramon Ramos testified he began driving for DMF in 1995 and continued

to drive for DMF off and on until 2010, when Colmac terminated the DMF services

contract. Over the years, Ramos testified that he and those who hauled for DMF were

"happy"; that DMF always kept him busy; that he knew the rate he would be paid by

DMF before he went to a yard; and that DMF always paid him on time.

Ramos testified he was "shocked" when he read the bulletin prepared by Bates

notifying the DMF drivers that Colmac had terminated the DMF services contract.

Ramos attended the meeting at Colmac the following day. During the meeting, Bates

informed the DMF drivers that there were some "differences" or "discrepancies" and that

Colmac asked DMF for a meeting to discuss the differences but that DMF was unwilling

to attend. Ramos also received a rate sheet from Colmac that showed DMF was paying

the drivers less than the rates shown on that sheet.

Ramos testified he understood the "differences" in rates to mean that DMF drivers

"were getting cut a little bit more than we were supposed to" "[a]s far as [our] pay." At

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the end of the meeting, Ramos testified he and all other DMF drivers signed up to drive

for Colmac. According to Ramos, none of the drivers ever went back to work for DMF.

DMF's economic expert, Jennie McNulty, testified that when she reviewed over

2,000 invoices generated between DMF and Colmac from 2006 through June 2010, she

found that DMF drivers picked up wood chips at 56 different wood yards and then

delivered them to Colmac's plant; that the 2006 rate sheet generated by Colmac was

based on yards/suppliers and not on individual drivers; that of those 56 yards, only 23 of

them were included on the 2006 Colmac rate sheet, which rates Colmac alleged DMF

was required to use to pay the DMF drivers; and thus, that there were 33 yards that were

not listed on the Colmac rate sheet.

McNulty opined that of the 23 yards that were on the rate sheet, the invoices

showed the rates DMF paid its drivers from 17 of those yards differed from Colmac's

rates. McNulty further opined that between 2006 and June 2010, all drivers were

consistently paid the same rate when they hauled wood chips from those 17 yards. With

respect to the remaining six yards, McNulty opined the drivers were paid the same rate

that appeared on Colmac's rate sheet.

After reviewing DMF's books from 1999 through mid-2010, McNulty testified

DMF earned about 15 percent "net profit" for every dollar Colmac paid DMF. Using the

15 percent figure, McNulty considered the value of the Gold Coast Recycling contract

DMF lost because of its inability to hire drivers. McNulty opined the value of the Gold

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Coast Recycling contract would have been $780,000 a year, or about $117,000 in annual

profits lost by DMF under that contract.2

B. Procedural Summary

As noted, DMF asserted slander per se and interference with prospective economic

relations causes of action against Colmac and Bates. Colmac cross-complained against

DMF, Susan and Kristie, asserting causes of action for promissory fraud, fraudulent

concealment, conversion by false pretenses and violation of Business and Professions

Code section 17200 et seq. Colmac in its cross-complaint alleged that DMF was required

to pay the DMF truckers the rates set by Colmac; that in May 2010, Colmac discovered

DMF was not doing so but rather "was retaining for itself money that was supposed to go

to the truckers"; and that because of DMF's "fraudulent conduct and unlawful business

practice," Colmac stopped using DMF as a broker to haul loads to Colmac's plant.

Colmac sought compensatory and punitive damages against DMF, Susan and Kristie.

The jury in the special verdict form found that a contract existed between DMF

and Colmac; that DMF substantially complied with the terms of that contract; and that

Colmac failed "to do something" required under that contract and that failure caused

DMF harm.3

2 The record shows Kristie estimated that DMF's profit from the Gold Coast
Recycling contract would have been about 10 percent of the money it received under the
contract. We note, however, that the discrepancy between the 10 and 15 percent figures
is not an issue in this appeal because Colmac is "not arguing that the $400,000 is not
supported by substantial evidence if causation was proved." (Italics added.)

3 Colmac has not appealed the jury's finding Colmac breached the contract with
DMF with respect to the nonpayment of broker fees for May and June 2010, including
the award of $13,000 in favor of DMF.
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 With respect to the defamation cause of action, the jury found Bates made the

statement that there "was a discrepancy in the rates" to a person other than DMF and that

it was made with malice toward DMF; that the person or persons to whom the

"discrepancy" statement was made (i.e., the truckers) reasonably understood it both

pertained to DMF and meant DMF had committed a crime; that the statement was not

"substantially true"; and that Bates failed to use reasonable care to determine its truth or

falsity. After finding Bates's conduct was a substantial factor in causing DMF actual

harm, as noted the jury awarded DMF $400,000 in damages for harm to DMF's

"property, business, trade, profession, or occupation" and $1.35 million in damages for

harm to DMF's "reputation."

As also noted, the jury found Bates intended to disrupt the economic relationship

between DMF and its drivers and that she engaged in wrongful conduct "through

defamation" to disrupt that relationship. After finding Bates was acting in the course and

scope of her employment when she engaged in the wrongful conduct and that such

conduct was a substantial factor in causing harm to DMF, the jury awarded DMF

economic damages of $400,000.

The jury also found that DMF proved by clear and convincing evidence that Bates

acted with "malice, oppression, or fraud" when making the defamatory statement and

when she interfered with the economic relationship between DMF and its drivers. The

jury awarded DMF $100,000 in punitive damages as a result.

On Colmac's cross-complaint, the jury found neither Susan, Kristie nor DMF

made a promise to Colmac that was "important to the transaction" for purposes of the

failure to pay as promised cause of action. The jury also found neither Susan, Kristie nor

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DMF intentionally failed to disclose an important fact that Colmac "did not know and

could not reasonably have discovered"; and finally, that Colmac did not have any

"ownership interest in money that it provided to DMF" for purposes of Colmac's

conversion cause of action.

Following the verdict, Colmac moved for a new trial and for JNOV.

DISCUSSION

I

Appellate Jurisdiction

As noted, we requested supplemental briefing from the parties concerning whether

we have appellate jurisdiction over the appeal of Colmac to the judgment and to the

denial of the JNOV motion and over the appeal of DMF to the court's order granting a

motion for new trial on defamation damages. As we discuss, because we affirm the trial

court's order granting the new trial motion, we conclude we lack appellate jurisdiction to

consider Colmac's appeal of the judgment, although we further conclude we have

jurisdiction to consider Colmac's appeal to the denial of the JNOV because it is a separate

appealable order.

It is axiomatic that a judgment is vacated when a motion for new trial is granted.4

(Keck, supra, 232 Cal.App.4th at p. 302; Marshall v. Brown (1983) 141 Cal.App.3d 408,

414 (Marshall).) This rule applies even when the trial court grants only a partial new

4 In contrast to an order granting a new trial motion when the judgment is vacated,
an order denying such a motion is not independently appealable "'and may be reviewed
only on appeal from the underlying judgment.' (Walker v. Los Angeles County
Metropolitan Transportation Authority (2005) 35 Cal.4th 15, 19 . . . .)" (Keck, supra,
232 Cal.App.4th at p. 302.)
19
trial. (Beavers, supra, 225 Cal.App.3d at p. 329.) The Beavers court explained: "[T]he

rule is settled that the portions of the judgment which are not subject to the new trial

order are nevertheless not appealable. The courts have reasoned that the new trial order

has the effect of vacating the entire judgment and holding in abeyance the portions which

are not subject to a new trial until one final judgment can be entered. [Citations.] As

[one] court explained it in the context of a new trial on the single issue of damages, the

'superior court judgment was set aside in its entirety when the court granted a new trial as

to damages . . . .' [Citation.] 'As there can be only a single judgment in an action, if the

order granting the limited new trial of damages is to stand, there will be no final

judgment until the trial of that issue ends and the determination of the appeal, if any, from

the then judgment.'" (Ibid.)

In Keck, this court recently held it lacked jurisdiction to hear a former employer's

appeal of a judgment in favor of a former employee after the trial court granted the

former employee's motion for additur or, in the alternative, for a new trial on damages.

In reaching our decision, we rejected the contention of the former employer that it would

be "anomalous" to consider, and possibly affirm, a "new trial on damages and to consider

claims that go to liability in a subsequent appeal." (Keck, supra, 232 Cal.App.4th at p.

303.) We noted, however, that is "precisely the outcome that case law contemplates."

(Ibid.)

Similarly, in Marshall the court granted the parties' motions for new trial after the

jury initially returned a verdict in favor of the plaintiff former employee that was

inconsistent as it related to the defendant corporate employer and to the individual

defendant who managed the corporation. The jurors deliberated further to consider the

20
issue of damages. Shortly thereafter, the jury returned a verdict that was less than its

original verdict. (Marshall, supra, 141 Cal.App.3d at p. 413.)

After judgment was entered, the plaintiff moved for additur or for a new trial on

damages only. The defendants also moved for new trial. The trial court granted the

motions on the "'grounds of inadequate and excessive damages'" unless both sides agreed

to the consent of entry of judgment based on amounts provided in the order. (Marshall,

supra, 141 Cal.App.3d at p. 413.)

The Marshall court, like our decision in Keck, concluded the grant of the new trial

motions resulted in the judgment being vacated because there was "no longer a judgment,

any appeal must be from the order granting a new trial." (Marshall, supra, 141

Cal.App.3d at p. 414.) For reasons of judicial economy, the court in Marshall therefore

refused to review the defendants' other contentions on appeal that were "not likely to be

renewed in a new trial limited to damages," including whether the court erred in

admitting certain evidence and whether counsel engaged in misconduct. (Id. at pp. 415-

416.) The court stated consideration of those issues "will have to await entry of

judgment, from which defendants will then have a right of appeal." (Id. at p. 416.)

When an order granting a new trial motion is reversed, however, a court of review

then may consider the appeal of the judgment. (Keck, supra, 232 Cal.App.4th at p. 304,

citing Spencer v. Nelson (1947) 30 Cal.2d 162, 164 (Spencer).) In Keck, we concluded

the Spencer "exception" did not apply because we "affirm[ed] the trial court's order

granting a new trial on damages, and thus, upon the finality of our opinion [in Keck], the

underlying judgment is 'absolutely vacated.' [Citation.]" (Keck, supra, 232 Cal.App.4th

at p. 304.)

21
 In light of the foregoing and as discussed post, we conclude the trial court properly

exercised its broad discretion when it granted in part Colmac's new trial motion only on

the issue of defamation damages. As such, we further conclude the Spencer "exception"

does not apply in this case. However, as noted, we do have jurisdiction to consider

Colmac's appeal of the denial of its JNOV motion, which we turn to next.

II

JNOV Motion

A. Guiding Principles

"A trial court must grant a motion for JNOV whenever a motion for a directed

verdict for the aggrieved party should have been granted. ([Code Civ. Proc.,] § 629.)

'"'[T]he power of the court to direct a verdict is absolutely the same as the power of the

court to grant a nonsuit.' [Citation.] 'A motion for a directed verdict "is in the nature of a

demurrer to the evidence, and is governed by practically the same rules, and concedes as

true the evidence on behalf of the adverse party, with all fair and reasonable inferences to

be deduced therefrom."'"' [Citation.]

"Ordinarily, when reviewing a ruling on a motion for JNOV, 'an appellate court

will use the same standard the trial court uses in ruling on the motion, by determining

whether it appears from the record, viewed most favorably to the party securing the

verdict, that any substantial evidence supports the verdict. "'"If there is any substantial

evidence, or reasonable inferences to be drawn therefrom in support of the verdict, the

motion should be denied."'"' [Citation.]" (Keck, supra, 232 Cal.App.4th at p. 309, italics

added; see also Sukoff v. Lemkin (1988) 202 Cal.App.3d 740, 743 [noting the purpose of

22
a JNOV "'is not to afford a review of the jury's deliberation but to prevent a miscarriage

of justice in those cases where the verdict rendered is without foundation'"].)

B. Slander

Civil Code section 46 provides: "Slander is a false and unprivileged publication,

orally uttered, and also communications by radio or any mechanical or other means

which: [¶] 1. Charges any person with crime, or with having been indicted, convicted, or

punished for crime; [¶] 2. Imputes in him the present existence of an infectious,

contagious, or loathsome disease; [¶] 3. Tends directly to injure him in respect to his

office, profession, trade or business, either by imputing to him general disqualification in

those respects which the office or other occupation peculiarly requires, or by imputing

something with reference to his office, profession, trade, or business that has a natural

tendency to lessen its profits; [¶] 4. Imputes to him impotence or a want of chastity; or [¶]

5. Which, by natural consequence, causes actual damage."

"Defamation is an invasion of the interest in reputation. The tort involves the

intentional publication of a statement of fact that is false, unprivileged, and has a natural

tendency to injure or which causes special damage. [Citations.] Publication means

communication to some third person who understands the defamatory meaning of the

statement and its application to the person to whom reference is made. Publication need

not be to the 'public' at large; communication to a single individual is sufficient.

[Citations.] . . .

"Where the words or other matters which are the subject of a defamation action are

of ambiguous meaning, or innocent on their face and defamatory only in the light of

extrinsic circumstances, the plaintiff must plead and prove that as used, the words had a

23
particular meaning, or 'innuendo,' which makes them defamatory. (Washer v. Bank of

America (1943) 21 Cal.2d 822, 828-829 [(Washer)], overruled on other grounds,

MacLeod v. Tribune Publishing Co. (1959) 52 Cal.2d 536, 551 [(MacLeod)] . . . .)

Where the language at issue is ambiguous, the plaintiff must also allege the extrinsic

circumstances which show the third person reasonably understood it in its derogatory

sense (the inducement). [Citations.]

"In all cases of alleged defamation, whether libel or slander, the truth of the

offensive statements or communication is a complete defense against civil liability,

regardless of bad faith or malicious purpose. [Citations.] The defendant must 'justify,' or

show the truth of the statements. If the statements are not defamatory on their face but

are capable of a defamatory meaning imputed by innuendo, the defendant must

demonstrate the truth of the statements in that sense in which the plaintiff's innuendo

explains them. . . .

"The question whether a statement is reasonably susceptible to a defamatory

interpretation is a question of law for the trial court. Only once the court has determined

that a statement is reasonably susceptible to such a defamatory interpretation does it

become a question for the trier of fact whether or not it was so understood. [Citations.]"

(Smith v. Maldonado (1999) 72 Cal.App.4th 637, 645-647, fns. omitted (Smith).)

C. Analysis

The record shows the trial court denied Colmac's JNOV motion with the exception

of the punitive damages award against Bates personally, which DMF conceded was

inappropriate because there was no evidence proffered at trial regarding her financial

condition.

24
 1. Bates's "Discrepancy" Statement Does Not Fail as a Matter of Law

In connection with its JNOV, Colmac contends Bates's "discrepancy" statement

was not slanderous per se under Civil Code section 46 because, according to Colmac, the

statement "on its face" must allegedly "clearly convey" a meaning that qualifies under the

first four subdivisions of Civil Code section 46. Colmac relies on Regalia v. The

Nethercutt Collection (2009) 172 Cal.App.4th 361 (Regalia) to support this contention.

However, we conclude that Regalia is inapposite because, unlike the facts in

Regalia where the jury found plaintiff did not suffer any actual damages, the jury in the

instant case awarded DMF compensatory damages. The court in Regalia noted the

importance of this distinction when it recognized that a slander that does not fall within

the first four subdivisions is slander per quod and, thus, only actionable when special

damages are proved. (Regalia, supra, 172 Cal.App.4th at p. 367; see Mann v. Quality

Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 107 [noting slander per se is

actionable without proof of special damages].)

Moreover, the court in Regalia concluded the statements there at issue were not

reasonably susceptible to a slanderous interpretation, which is in contrast to the instant

case where the "discrepancy" statement by Bates was, when considered in context (i.e.,

with innuendo; see Washer, supra, 21 Cal.2d at p. 828), reasonably susceptible to such an

interpretation for the issue to go to the jury. (See MacLeod, supra, 52 Cal.2d at p. 546

[stating the general rule that whether a statement is "reasonably susceptible" to

defamatory interpretation is a "question for the court and, if so, whether or not it was so

understood is a question for the jury"].)

25
 In any event, we disagree with Regalia to the extent it suggests that as a matter of

law a statement cannot be actionable within the first four subdivisions of Civil Code

section 46 unless the statement is defamatory on its face. We note Civil Code section 46

contains no such limitation.

In addition, we note our high court in Washer rejected such a rule when it

concluded the word "falsified," which was used by plaintiff's former employee to

describe plaintiff's actions in connection with an employee expense account, was subject

to more than one meaning, and, thus, when it further concluded that for plaintiff to "state

a cause of action for the use of the word 'falsify' as one charging him with a crime, it was

necessary for [plaintiff] to plead that meaning by innuendo." (Washer, supra, 21 Cal.2d

at p. 828, italics added.)5 Washer teaches that, when the offending language is

ambiguous or not on its face slanderous, "in addition to an innuendo" it is "necessary for

the plaintiff to allege special damages by reason of the meaning gained from the

publication." (Ibid; see 1 Sack on Defamation (4th ed. 2010) § 2:8.4, p. 2-131 ["It is a

question of law, for the court to determine, whether a communication is libelous or

slanderous per se. But it remains within the province of the jury to determine whether the

reader understood the article, in light of the relevant extrinsic facts, if any, to be

defamatory." (italics added)].)

5 In contrast, the Washer court found the "falsify" statement and the statement that
plaintiff was "guilty of flagrant insubordination" were defamatory on their face with
respect to subdivision 3 of Civil Code section 46, as these collective statements, by their
"natural and probable effect," tended to injure the plaintiff in his occupation, trade or
business. (Washer, supra, 21 Cal.2d at pp. 827-828.) The Washer court thus concluded
no innuendo was required to show slander under subdivision 3 of Civil Code section 46.
26
 We thus reject Colmac's contention that DMF was precluded as a matter of law

from establishing Bates's "discrepancy" statement was slanderous merely because the

statement was also susceptible to an innocent interpretation (see MacLeod, supra, 52

Cal.2d at pp. 550-551) or on its face was ambiguous. (See Washer, supra, 21 Cal.2d at p.

828; see also 5 Witkin, Summary of California Law (10th ed. 2005) Torts, § 555, p. 811

[noting that "[w]here words or other matters are of ambiguous meaning, or are innocent

on their face but defamatory in light of extrinsic circumstances (i.e., not defamatory 'per

se'), the plaintiff must plead and prove that they were used in a particular meaning that

makes them defamatory (the 'innuendo')"].)

2. The "Discrepancy" Statement, in Context, Was Reasonably Understood to

Suggest DMF Committed a Crime6

Colmac next contends JNOV should have been granted because there was no

evidence that the truckers understood Bates's "discrepancy" statement to mean that DMF

committed a crime, as found by the jury.7 During the hearing on the JNOV motion, the

6 We note Colmac's opening brief raises myriad additional issues that were not
included in Colmac's JNOV. In light of our conclusion post that the court properly
granted in part Colmac's new trial motion, we do not address in this opinion any
contentions raised by Colmac that were not raised in its JNOV motion. (See Keck, supra,
232 Cal.App.4th at p. 304.)

7 As noted, DMF's operative complaint alleged Bates's "discrepancy statement" was
slanderous not only because it accused DMF of committing a crime, namely theft or
embezzlement, but also because it tended to injure DMF with respect to its "profession,
trade or business," as set forth in Civil Code section 46, subdivision 3. For whatever
reason, however, the jury was limited in the special verdict to deciding whether the
"discrepancy statement" could be reasonably understood to accuse DMF of a crime
pursuant to Civil Code section 46, subdivision 1.
27
trial court in connection with this specific issue found there was evidence that, if credited,

could be reasonably understood by the truckers that DMF was stealing from them:

"THE COURT: I thought about this a lot. Does it matter whether it's defamation

per se?

"[Colmac's counsel]: Per se.

"THE COURT: Yeah, because either way, there's sufficient evidence to support

that there was a statement [by Bates], and in the context it was accusing DMF of stealing

from the drivers. [¶] . . . [¶]

"[Colmac's counsel]: Yeah. But the crime might be stealing from your workers.

But saying there was a discrepancy in the rates, does not clearly convey the meaning of

stealing from the workers.

"THE COURT: What other means do you have?

"[Colmac's counsel]: It could mean bad bookers, negligence. It could mean

hundreds of different things other than committing a crime. Possibly it could be

committing a crime, but I don't know how underpaying an independent contractor rises to

the level of committing a crime.

"THE COURT: How about getting money for that fuel charge that was supposed

to go to the drivers, then keeping it, putting it in your own pocket. I don't know how

there's not a reasonable inference that's accusing him of a crime.

"[Colmac's counsel]: Well, because it could mean a lot -- this was what we're

talking about was defamation per se. It has to clearly convey on its face there was a

commission of a crime." (Italics added.)

28
 Theft is defined in Penal Code section 484, subdivision (a) in part as follows:

"Every person who shall feloniously steal, take, carry, lead, or drive away the personal

property of another, or who shall fraudulently appropriate property which has been

entrusted to him or her, or who shall knowingly and designedly, by any false or

fraudulent representation or pretense, defraud any other person of money, labor or real

or personal property, or who causes or procures others to report falsely of his or her

wealth or mercantile character and by thus imposing upon any person, obtains credit and

thereby fraudulently gets or obtains possession of money, or property or obtains the labor

or service of another, is guilty of theft." (Italics added.)

Embezzlement is defined in Penal Code section 532, subdivision (a) as follows:

"Every person who knowingly and designedly, by any false or fraudulent representation

or pretense, defrauds any other person of money, labor, or property, whether real or

personal, or who causes or procures others to report falsely of his or her wealth or

mercantile character, and by thus imposing upon any person obtains credit, and thereby

fraudulently gets possession of money or property, or obtains the labor or service of

another, is punishable in the same manner and to the same extent as for larceny of the

money or property so obtained." (Italics added.)

Initially, we note the above exchange from the JNOV hearing shows Colmac

recognized that Bates's discrepancy statement was potentially ambiguous and that the

statement could be interpreted to mean that DMF had committed a crime, which, as we

discussed ante, was all that was required for the issue to go to the jury under the

circumstances of this case, where special damages are alleged. (See Washer, supra, 21

Cal.2d at p. 828.)

29
 In any event, indulging, as we must, every favorable inference that may be drawn

from the evidence (see Casella v. SouthWest Dealer Services, Inc. (2007) 157

Cal.App.4th 1127, 1144), we independently conclude there is sufficient evidence in the

record to support the jury's finding that the DMF truckers reasonably could have

understood Bates's discrepancy statement, when considered in context, to mean that DMF

had committed the crime of theft and/or embezzlement. (See Clay v. Lagiss (1956) 143

Cal.App.2d 441, 445 (Clay) [noting a charge of theft is slanderous per se].)

Indeed, the record shows that the day before the meeting when Bates made the

discrepancy statement, Colmac, after an 18-year relationship, terminated the services

contract with DMF. After doing so, Bates prepared on behalf of Colmac a notice to "All

DMF drivers" stating that a meeting would take place the following day—a Saturday—at

Colmac's plant and that Colmac would pay the drivers directly for loads hauled from May

16 to May 31 and from June 1 to June 15, 2010. The record shows this was the first time

that Colmac had ever paid drivers directly.

Ramos testified that during the Saturday meeting at the Colmac plant, Bates

informed the DMF drivers that there were some "differences" or "discrepancies" and that

Colmac had asked DMF for a meeting to discuss this issue but that DMF was unwilling

to meet. After Bates handed each of the drivers a rate sheet, Ramos testified he came to

the conclusion that that the DMF drivers "were getting cut a little bit more than we were

supposed to" "[a]s far as [our] pay."

Moreover, Bates acknowledged at trial that using the word "discrepancy" at the

meeting suggested to the drivers that, in context, DMF was paying them less than what

30
Colmac and she thought they should have been after Bates also provided the drivers a

sheet showing the rates Colmac was paying DMF.

In light of the long history of dealings between Colmac and DMF, the sudden

termination by Colmac of the DMF services contract a day earlier, the notice it and not

DMF would be paying the drivers for loads they hauled in May and June 2010, and the

statement by Bates during the meeting that DMF had refused to attend a meeting to the

explain the "discrepancy," we independently conclude there is sufficient evidence to

support the jury's finding that the truckers reasonably could have understood Bates's

discrepancy statement to mean that DMF had committed the crime of theft and/or

embezzlement. (See Pen. Code, §§ 484, subd. (a) [providing theft is when a person

"steal[s]" or "take[s]" or "fraudulently appropriate[s]" the "personal property" of another,

including "money"] & 532, subd. (a) [providing embezzlement is when a person

"knowingly and designedly, by any false or fraudulent representation or pretense,

defrauds any other person of money"]; Clay, supra, 143 Cal.App.2d at p. 445; Murray's

Iron Works, Inc. v. Boyce (2008) 158 Cal.App.4th 1279, 1284 (Boyce) [noting that on

"appeal from the denial of a JNOV motion, this court reviews the record in order to make

an independent determination whether there is any substantial evidence to support the

jury's findings"].)

Finally, as noted Colmac in its cross-complaint accused DMF, Susan and Kristie

of engaging in fraudulent and other wrongful conduct when DMF kept money for itself

that Colmac entrusted would be paid to the DMF drivers as Danny and Bates had

allegedly agreed under the terms of the parties' contract. Specifically, Bates testified the

amounts DMF "wrongfully paid [itself]" and not the truckers from 2007 to 2010 was in

31
excess of $350,000. These allegations and evidence further support the finding of the

jury that the truckers reasonably understood that DMF committed a crime when it

unlawfully and intentionally kept money Colmac contended rightfully belonged to the

truckers.

3. There Is Sufficient Evidence to Support the Jury's Finding that the

"Discrepancy" Statement Was a Substantial Factor in Causing DMF Harm

Colmac next contends there is no evidence "that DMF was unable to recruit

drivers to fulfill the supposed Gold Coast contract because of the defamation." The

record shows that with respect to causation, the jury was instructed that DMF was

"entitled to recover its actual damages if it proves that Colmac Energy, Inc.'s and Paula

Bates' wrongful conduct was a substantial factor in causing" DMF harm. The record

further shows, however, that the jury was not instructed with CACI No. 4308 on the

meaning of substantial factor and that in closing argument, the parties' counsel did not

address in any meaningful way the meaning of "substantial factor."

"The concept of proximate or legal cause has 'defied precise definition.'

[Citations.] . . . [¶] Whether a defendant's conduct actually caused an injury is a question

of fact [citation] that is ordinarily for the jury [citation]. . . . Our Supreme Court has . . .

observed that the 'substantial factor' test generally subsumes the 'but for' test. [Citation.]

[¶] However the test is phrased, causation in fact is ultimately a matter of probability and

8 CACI No. 430 provides: "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.]"
32
common sense." (Osborn v. Irwin Memorial Blood Bank (1992) 5 Cal.App.4th 234, 252–

253.)

Moreover, the "substantial factor standard is a relatively broad one, requiring only

that the contribution of the individual cause be more than negligible or theoretical."

(Rutherford v. Owens–Illinois, Inc. (1997) 16 Cal.4th 953, 978 (Rutherford).) Even "a

very minor force" that causes harm is considered a cause in fact of the injury. (Bockrath

v. Aldrich Chemical Co. (1999) 21 Cal.4th 71, 79.) However, "'a force which plays only

an "infinitesimal" or "theoretical" part in bringing about [the] injury . . . is not a

substantial factor.'" (Ibid.)

The record shows some of the DMF drivers had worked for DMF for more than a

decade. Ramos testified he worked on and off for DMF for over 15 years and knew of

other drivers who worked for DMF just as long if not longer.

McNulty testified that over a 12-year span, she determined that on average a DMF

driver stayed with the company for three and a half years. Some drivers, according to

McNulty, worked for DMF for the entire 12-year span she studied.

Furthermore, Kristie testified part of her job responsibilities at DMF was to recruit

new drivers. According to Kristie, when DMF needed new drivers it would ask then-

current DMF drivers to recommend new drivers for hire. Kristie also testified that after

Colmac terminated DMF's service contract and hired all of the DMF drivers to haul

directly for Colmac, she went to several other plants that, like Colmac, burned "bio mass

and wood chips" to secure new contracts. As noted, she testified DMF ultimately secured

a contract from Gold Coast Recycling, but DMF lost that contract to another hauler

because DMF had no trucks to do the work and fulfill the contract.

33
 Specifically, Kristie testified that she called up "all the owner operators that were

hauling for [DMF] and was trying to get work, you know, get them back." None of the

DMF drivers ever returned to haul for DMF, however. Kristie also testified DMF lost

another business opportunity with Delano Energy for the same reason—DMF could not

find trucks willing to haul for DMF.

In addition, the record shows that up until Colmac terminated the services contract

with DMF in June 2010, DMF had hauled exclusively for Colmac. Indeed, Moffatt (the

CEO and President of Rainbow) testified that DMF hauled materials between his

company and Colmac and that after Colmac terminated DMF's service contract, Rainbow

"stopped using DMF," despite the fact DMF previously had a good reputation and was

known to "move[] quite a bit of material."

We independently conclude this evidence, and the reasonable inferences to be

drawn from it, support the jury's finding that Bates's discrepancy statement, when

considered in context, was more than a "negligible or theoretical" factor in causing

DMF's harm. (See Rutherford, supra, 16 Cal.4th at p. 978.) Indeed, before the Saturday

meeting when Bates made the discrepancy statement and Colmac gave the drivers a rate

sheet showing the rates Colmac contended the drivers should have been paid (a theory

rejected by the jury), DMF had between 30 and 40 drivers hauling for the company,

many of whom had been driving for DMF for years. After the meeting, however, DMF

had no drivers and, per Kristie's testimony, despite DMF's best efforts it was unable to

hire new drivers "for a very long time." As such, the court properly denied JNOV on the

issue of causation. (Boyce, supra, 158 Cal.App.4th at p. 1284.)

34
 4. DMF Proved an "Independent Wrongful Act," and Substantial Evidence

Supports the Jury's Finding this Act Was a "Substantial Factor" in Causing DMF harm,

for Purposes of its Interference Claim

Colmac contends the trial court also erred when it denied JNOV because DMF

failed to show Colmac engaged in an independent wrongful act for purposes of DMF's

interference claim. (See Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th

1134, 1153.) "[A]n act is independently wrongful if it is unlawful, that is, if it is

proscribed by some constitutional, statutory, regulatory, common law, or other

determinable legal standard." (Id. at p. 1159.)

Here, in light of our conclusion that Bates's discrepancy statement is slanderous

because, when considered in context, it accused DMF of a crime (i.e., theft and/or

embezzlement of money Colmac maintained rightfully belonged to the DMF drivers that

was unlawfully and fraudulently kept by DMF), and in light of our conclusion that this

statement was a substantial factor in bringing about DMF's harm, given its inability to

hire any drivers to fulfill the Gold Coast Recycling contract, we conclude DMF has

shown an independent wrongful act for purposes of its interference claim.

In addition, based on our conclusion that the jury's finding that Bates's discrepancy

statement was more than a "negligible or theoretical" factor in causing DMF's harm for

purposes of defamation (see Rutherford, supra, 16 Cal.4th at p. 978), we likewise

conclude this same evidence supports the causation finding of the jury in connection with

DMF's interference claim. As such, we independently conclude JNOV was properly

denied on this basis. (See Boyce, supra, 158 Cal.App.4th at p. 1284.)

35
 5. Punitive Damages against Colmac Based on Bates's Conduct as a "Managing

Agent"

Lastly, Colmac contends the trial court erred in denying JNOV because the jury

was not required to find in the special verdict form that the "wrongful act" giving rise to

punitive damages "was committed by an officer, director or managing agent of the entity

or was ratified by the corporation."

A plaintiff is entitled to punitive damages under Civil Code section 3294,

subdivision (a) if the plaintiff shows "by clear and convincing evidence that the defendant

has been guilty of oppression, fraud, or malice." When the defendant is a corporation,

"[a]n award of punitive damages . . . must rest on the malice of the corporation's

employees. [¶] But the law does not impute every employee's malice to the

corporation." (Cruz v. HomeBase (2000) 83 Cal.App.4th 160, 167.) Instead, the

oppression, fraud, or malice must be perpetrated, authorized, or knowingly ratified by an

officer, director, or managing agent of the corporation. (Civ. Code, § 3294, subd. (b).)

Our Supreme Court has interpreted "managing agent" in the context of subdivision

(b) of Civil Code section 3294 to include "only those corporate employees who exercise

substantial independent authority and judgment in their corporate decisionmaking so that

their decisions ultimately determine corporate policy. The scope of a corporate

employee's discretion and authority under our test is therefore a question of fact for

decision on a case-by-case basis." (White v. Ultramar (1999) 21 Cal.4th 563, 566-567.)

The White court explained that the authority to hire or fire is not determinative of the

managing agent issue: "In order to demonstrate that an employee is a true managing

agent under section 3294, subdivision (b), a plaintiff seeking punitive damages would

36
have to show that the employee exercised substantial discretionary authority over

significant aspects of a corporation's business." (Id. at p. 577.)

We conclude the special verdict form was not fatally defective on the issue of

whether Bates was a "managing agent" of Colmac. It is axiomatic that a jury must

resolve all of the ultimate facts presented to it in the special verdict, so that "'"nothing

shall remain to the court but to draw from them conclusions of law."'" (Myers Building

Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 959-960.) We

note, however, this requirement is limited to issues that are "'controverted.'" (See Id. at p.

960.)

Here, we independently conclude the issue of whether Bates was a "managing

agent" of Colmac was uncontroverted. Indeed, the record shows that since Colmac began

operations in the early 1990's, Bates has acted as its all-important "fuel manager." The

record also shows that Bates signed the notice of termination that Colmac sent DMF on

June 11, 2010; that Bates on that same day prepared the notice informing all DMF drivers

of the termination of the DMF services contract and of the meeting the following day at

Colmac's facility; that Bates on behalf of Colmac addressed the DMF drivers at that

meeting and discussed the reason(s) for Colmac's termination of the services contract

with DMF; that Bates prepared a June 14, 2010 memorandum on behalf of Colmac

regarding the reason(s) for Colmac's termination of the services contract, in which Bates

explained that "we had a problem with payments to the trucks" and that "we had

discrepancies in the rates, minimum loads, and fuel surcharges" DMF was paying its

truckers (italics added); and that Bates in late June 2010 sent DMF correspondence

regarding "[f]inal [i]nvoicing," which advised Kristie that Colmac would be paying the

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"drivers for shortages they incurred in their payment from DMF Trucking for the month

of May, 2010."

We independently conclude such evidence, when also considered in light of the

other evidence discussed ante, including Bates's extensive and continuing role in

negotiating on behalf of Colmac the services contract with Danny and in ensuring

Colmac had a sufficient supply of wood chips and other materials to burn at its plant,

supports the conclusion that the issue of Bates acting as a "managing agent" of Colmac

was uncontroverted.

In any event, we also conclude any error in the special verdict form is harmless in

view of the above evidence in this case. (See Taylor v. Nabors Drilling USA, LP (2014)

222 Cal.App.4th 1228, 1244 [rejecting any contention that a defective special verdict

form is reversible per se for structural error]; see also Cal. Const., art. VI, § 13 [providing

"[n]o judgment shall be set aside . . . as to any matter of procedure, unless, after an

examination of the entire cause, including the evidence, the court shall be of the opinion

that the error complained of has resulted in a miscarriage of justice"].) For this separate

reason, we conclude Colmac's JNOV was properly denied with respect to the award of

punitive damages against Colmac.

III

New Trial Motion

A. Additional Background

As noted, Colmac also moved for a new trial under Code of Civil Procedure

38
section 657,9 including on the grounds of excessive or inadequate damages and/or

insufficiency of the evidence to justify the verdict or other decision. Colmac alleged

there was no evidence in the record to support the jury's finding that Bates's statement

there was a discrepancy in the rates DMF was paying its truckers caused $1.35 million of

"'actual damages'" to DMF's reputation. In addition, Colmac proffered the declarations of

two jurors, including the jury foreperson, who stated the jury arrived at the damage figure

for reputation harm not by looking at the evidence of actual damage, but rather by taking

a percentage of Colmac's net worth.

9 Code of Civil Procedure section 657 provides in relevant part: "The verdict may
be vacated and any other decision may be modified or vacated, in whole or in part, and a
new or further trial granted on all or part of the issues, on the application of the party
aggrieved, for any of the following causes, materially affecting the substantial rights of
such party: [¶] . . . [¶] 5. Excessive or inadequate damages. [¶] 6. Insufficiency of the
evidence to justify the verdict or other decision, or the verdict or other decision is against
law. [¶] . . . [¶] When a new trial is granted, on all or part of the issues, the court shall
specify the ground or grounds upon which it is granted and the court's reason or reasons
for granting the new trial upon each ground stated. [¶] A new trial shall not be granted
upon the ground of insufficiency of the evidence to justify the verdict or other decision,
nor upon the ground of excessive or inadequate damages, unless after weighing the
evidence the court is convinced from the entire record, including reasonable inferences
therefrom, that the court or jury clearly should have reached a different verdict or
decision. [¶] The order passing upon and determining the motion must be made and
entered as provided in Section 660 and if the motion is granted must state the ground or
grounds relied upon by the court, and may contain the specification of reasons. . . . [¶]
On appeal from an order granting a new trial the order shall be affirmed if it should have
been granted upon any ground stated in the motion, whether or not specified in the order
or specification of reasons, except that (a) the order shall not be affirmed upon the ground
of the insufficiency of the evidence to justify the verdict or other decision, or upon the
ground of excessive or inadequate damages, unless such ground is stated in the order
granting the motion and (b) on appeal from an order granting a new trial upon the ground
of the insufficiency of the evidence to justify the verdict or other decision, or upon the
ground of excessive or inadequate damages, it shall be conclusively presumed that said
order as to such ground was made only for the reasons specified in said order or said
specification of reasons, and such order shall be reversed as to such ground only if there
is no substantial basis in the record for any of such reasons."
39
 In opposing Colmac's new trial motion, DMF contended the juror declarations

submitted by Colmac were inadmissible because they impermissibly showed the jurors'

subjective reasoning process regarding the award of reputation damages. DMF

alternatively contended if such declarations were admissible, Colmac did not carry its

burden to show jury misconduct in calculating this award because DMF included four

juror affidavits of its own showing the jury did not base that award on the alleged value

of Colmac.

At the hearing on the motion for new trial, the court ruled none of the juror

declarations were admissible as they all went to the jury's collective thought process. As

noted, the court conditionally granted Colmac's new trial motion unless DMF agreed to

accept a remittitur to $400,000 (not including the $100,000 punitive damages award). In

conditionally granting the motion, the court found the evidence of actual reputation

damage was insufficient because the "only damage to reputation" of DMF was "economic

damage," which the jury found was $400,000. The court also found DMF's damages

were "all economic" and found the evidence supported the $400,000 award for economic

loss.

A day after the hearing on the motion for new trial, the court issued its ruling

conditionally granting the motion. The March 13, 2013 order in part provides:

"For the reasons stated at the hearing and in the tentative ruling, the motion for a

new trial is granted as to damages under the seventh cause of action, for defamation. The

new trial will be as to all damages awarded under that cause of action. However, the

motion is granted conditionally on the reduction of the damages awarded on that cause of

40
action to $500,000. If plaintiff notifies the Court by a declaration signed by its attorney

of record that it accepts the remittitur, then the motion for a new trial shall be denied."

Colmac subsequently appeared ex parte before the court regarding the new trial

motion. Relying on Code of Civil Procedure section 657, Colmac suggested the court's

March 13 should order be modified to (1) state the specific ground under that statute in

support of that order and (2) provide the "'statement of reasons'" for the new trial order.

Colmac also informed the court that DMF had rejected the remittitur. In response, the

court in its March 22, 2013 order modified the March 13 order in part as follows:

"As discussed at the hearing of these motions and described in the order filed

March 13, 2013, the Court believes that the evidence admitted at trial does not support

the damages for loss of reputation under the defamation cause of action and that the

damages under the defamation cause of action are excessive. The evidence supported the

$400,000 but not the $1.35 million for loss of reputation. Indeed, the only harm to

reputation appears to be lost business, which was speculative other than the $400,000

awarded by the jury. The Court stated that it would deny the motion if Plaintiff DMF

Trucking accepted a remittitur of damages under the defamation cause of action to

$500,000 (including $100,000 in punitive damages). It has been informed that plaintiff

has chosen not to accept the remittitur. Therefore, the Court grants the motion for a new

trial on damages under the defamation cause of action under California Code of Civil

Procedure sections 657(5) and 657(6)." (Italics omitted.)

B. Governing Law

"The normal standard of review of an order granting a new trial motion is both

well established and highly deferential. A new trial motion 'is addressed to the judge's

41
sound discretion; [the judge] is vested with the authority, for example, to disbelieve

witnesses, reweigh the evidence, and draw reasonable inferences therefrom contrary to

those of the trier of fact; on appeal, all presumptions are in favor of the order as against

the verdict, and the reviewing court will not disturb the ruling unless a manifest and

unmistakable abuse of discretion is made to appear.' [Citation.] In exercising its broad

discretion, 'the trial court may draw inferences opposed to those accepted by the jury, and

may thus resolve the conflicting inferences in favor of the moving party, for "[i]t is only

where it can be said as a matter of law that there is no substantial evidence to support a

contrary judgment that an appellate court will reverse the order of the trial court."'

[Citation.] While the reviewing court must consider only those reasons for granting the

motion stated by the trial court in its order, within those confines the question on appeal

from an order conditionally granting a new trial on the basis of excessiveness of damages

is simply 'whether a verdict for an amount considerably less than that awarded [by the

jury] would have had reasonable and substantial support in the evidence.' [Citation.]"

(Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th

359, 379 (Horsford).)

Thus, when a trial court has granted a new trial on the grounds of

"[e]xcessive . . . damages" or "[i]nsufficiency of the evidence" (Code Civ. Proc., § 657,

subds. 5 & 6), "'we have held that an order granting a new trial under section 657 "must

be sustained on appeal unless the opposing party demonstrates that no reasonable finder

of fact could have found for the movant on [the trial court's] theory." [Citation.]

Moreover, "[a]n abuse of discretion cannot be found in cases in which the evidence is in

conflict and a verdict for the moving party could have been reached . . . ." [Citation.] In

42
other words, "the presumption of correctness normally accorded on appeal to the jury's

verdict is replaced by a presumption in favor of the [new trial] order." [Citation.] [¶]

The reason for this deference "is that the trial court, in ruling on [a new trial] motion, sits

. . . as an independent trier of fact." [Citation.] Therefore, the trial court's factual

determinations, reflected in its decision to grant the new trial, are entitled to the same

deference that an appellate court would ordinarily accord a jury's factual determinations.

[¶] . . . The trial court . . . is in the best position to assess the reliability of a jury's verdict

and, to this end, the Legislature has granted trial courts broad discretion to order new

trials. The only relevant limitation on this discretion is that the trial court must state its

reasons for granting the new trial, and there must be substantial evidence in the record to

support those reasons.' (Lane v. Hughes Aircraft Co. [(2000)] 22 Cal.4th [405,] 411–412,

italics omitted.)" (Horsford, supra, 132 Cal.App.4th at p. 386.)

C. Analysis

Here, we conclude the trial court's order granting a new trial on the issue of

defamation damages complied with Code of Civil Procedure section 657. The record

shows the court in its March 22, 2013 modified order set forth the grounds for granting

the new trial motion, namely insufficient evidence to support the damage award for

reputation harm and, in the alternative, the excessiveness of that award. Moreover, the

record shows the court provided the reasons for its conclusion, noting the evidence

supported awarding $400,000 in damages for economic harm when DMF was unable to

fulfill the Gold Coast Recycling contract after Colmac terminated the services contract

with DMF.

43
 Furthermore, the record supports the court's determination that the evidence was

inadequate to support the $1.35 million in reputation damages and/or that this award was

excessive. Indeed, there is no dispute here the DMF was not entitled to damages from

Colmac as a result of Colmac's termination of the services contract, which the record

shows netted DMF several million dollars each year. DMF admitted during the trial,

including during closing argument, that DMF brought the lawsuit "because of what was

said [by Bates] to those drivers after [DMF was] terminated." (Italics added.) Thus,

although the record shows millions of dollars "changed hands between DMF . . . and

Colmac every year," as DMF contends, the trial court could reasonably find this evidence

did not support the $1.35 million award for reputation harm.

In addition, the record shows McNulty testified as DMF's economic expert that

DMF suffered losses of about $117,000 each year as a result of its inability to hire and

train new drivers to perform the Gold Coast Recycling contract. There is no other

evidence in the record of any additional losses other than the testimony of McNulty.

Although her testimony supports the jury's award of $400,000 in damages for lost

business, a finding not challenged by Colmac on appeal,10 we conclude the trial court,

reweighing the evidence as it is permitted when deciding a new trial motion, could

conclude this figure did not support the $1.35 million reputation award.

Indeed, to support the reputation award, DMF would have been required to

perform the Gold Coast Recycling contract for more than 10 years. (See Stevens v.

Parke, Davis & Co. (1973) 9 Cal.3d 51, 60 [noting that "'[no] hard and fast rule can be

10 See footnote 2, ante.
44
laid down as to the content of such a specification [as required in Code of Civil Procedure

section 657], and it will necessarily vary according to the facts and circumstances of each

case'" and noting that when the ground relied on is insufficiency of the evidence, "the

trial judge's specification of reasons 'must briefly identify the portion of the record which

convinces the judge "that the court or jury clearly should have reached a different verdict

or decision"'"].)

Finally, that the jury was entitled to award DMF "assumed" damages for harm to

its reputation also does not justify the $1.35 million reputation award in this case, as

DMF alternatively contends.11 The record instead shows the jury in the verdict form left

blank the award of assumed damages when it sought to award DMF "actual" damages for

such harm.12

11 The record shows the court instructed the jury with modified CACI No. 1704,
which neither party challenges on appeal. This instruction provided that even if DMF
"has not proved any actual damages for harm to reputation, the law assumes that it has
suffered this harm"; that DMF was entitled to receive compensation for such assumed
harm in whatever sum the jury found reasonable; and that the jury was required to award
DMF "at least a nominal sum, such as one dollar" for such presumed harm.

12 In light of our decision, we deem it unnecessary to decide if the trial court erred
when it found the juror declarations submitted both by Colmac and DMF were
inadmissible under Evidence Code section 1150, subdivision (a).
45
 DISPOSITION

Colmac's appeal to the judgment is dismissed. Colmac's appeal to the court's order

denying its JNOV motion is affirmed. DMF's appeal to the court's order granting

Colmac's motion for new trial on defamation damages is affirmed. Each party to bear

their own costs of appeal.

BENKE, Acting P. J.

WE CONCUR:

HUFFMAN, J.

HALLER, J.

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