Filed 11/24/21 HMH Enterprises v. TAG Enterprises CA2/5
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
HMH ENTERPRISES, INC., et al., B303640
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC694539)
v.
TAG ENTERPRISES, LLC,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Elizabeth Allen White, Judge. Affirmed.
Renshaw & Associates, Steven J. Renshaw and Lee A.
Hess; Lipow & Harris and Jeffrey A. Lipow, for Plaintiffs and
Appellants.
Sheppard, Mullin, Richter & Hampton, Scott Sveslosky and
Sarah A. K. Blitz for Defendant and Respondent.
__________________________
INTRODUCTION
Plaintiffs HMH Enterprises Inc., Hekmat Popal, Masih
Rassoli, and Yosuf Mohammad Homayun appeal following
judgment in favor of defendant TAG Enterprises LLC. Plaintiffs
contend the trial court erred in granting two of defendant’s
motions in limine to exclude evidence of plaintiffs’ damages. We
affirm.
FACTS AND PROCEDURAL BACKGROUND
The lawsuit concerns the contemplated sale of a
laundromat business located in a shopping center in Cudahy,
California. Defendant TAG (sometimes referred to as landlord)
owns the Cudahy shopping center. Ji Hong Min (who is not a
party to the lawsuit) was a tenant of TAG’s who owned and
sought to sell the laundromat business. Plaintiffs were
interested buyers.
1. Attempted Sale of the Laundromat
In March 2017, shortly after the laundromat’s opening, its
24-hour operations began attracting “homeless [people], gang
members, and loiterers to the Cudahy Property in the evening
hours, causing extensive safety and health concerns for tenants,
vendors, and visitors.” TAG, as landlord, asserted that the terms
of the lease agreement prohibited such activity on the property.
TAG informed tenant Min about the complaints and safety
issues, and demanded he either hire security services to address
the ongoing problems, or reduce the overnight operating hours.
Min refused to do either, and instead decided to sell the business.
Under the lease, any assignment required TAG’s approval, but
TAG could not unreasonably withhold consent.
Min subsequently entered into a contract with plaintiffs to
sell the laundromat business for $2.2 million dollars. The
agreement was conditioned on TAG’s assignment of the lease. In
September 2017, TAG’s property manager was introduced to
2
plaintiffs as prospective purchasers. The property manager told
plaintiffs of the ongoing health and safety issues caused by the
laundromat’s overnight operations, and reiterated the same
solutions proposed to Min – reduce operating hours or obtain
security services at night. Plaintiffs then asked Min to reduce
the purchase price to account for the added costs of security. Min
refused, and in November 2017, plaintiffs chose to walk away
from the proposed purchase.1 One month later, plaintiffs bought
a laundromat in Culver City, California.
2. Plaintiffs’ Lawsuit
On February 16, 2018, plaintiffs filed a complaint against
TAG and its individual owners for intentional interference with
contract and discrimination in business dealings. By July 26,
2019, plaintiffs had dismissed the discrimination claim against
TAG and all causes of action against the individual defendants.
The court had also granted TAG’s motion for summary
adjudication of the punitive damages claim. This left a single
cause of action against TAG for economic damages based on
interference with contract.
To prove compensatory damages, plaintiffs retained
Samuel Biggs, a certified public accountant and litigation
consultant. Biggs expressed the opinion that plaintiffs had lost
$6,966,517 in projected profits for the laundromat business which
they were unable to purchase. To support his damages
calculations, Biggs intended to rely at trial primarily on what
was marked as Exhibit 10 — a document authored by tenant Min
and titled “the Cudahy Breakdown.” The Cudahy Breakdown
purported to show the laundromat’s average monthly profit.
1 In April 2018, shortly after this lawsuit was filed, Min sold
his laundromat to a buyer who elected to employ security services
at the laundromat from 11:00 p.m. to 5:00 a.m.
3
Biggs himself had prepared a different document, Exhibit 3,
which showed the laundromat’s projected income and losses over
the course of 21 years. Plaintiffs’ theory was that the lease,
which had 11 years remaining and included two five-year
renewal options, provided for a 21-year rental period. Under the
lease, the tenant could opt to renew if not in default. The rent for
the two five-year options was to be agreed upon by TAG and the
tenant.
3. TAG’s Motions in Limine
The court scheduled trial for September 16, 2019. On
August 15, 2019, TAG filed three motions in limine. The trial
court’s order granting two of the motions – “Motion in Limine No.
1 To Exclude The Expert Opinion Testimony of Samuel Biggs,”
and “Motion in Limine No. 2 To Exclude ‘Cudahy Breakdown’
Document” – form the basis of plaintiffs’ appeal.
In Motion in Limine No. 1, TAG argued that Biggs’s
testimony was “inherently unreliable and untrustworthy . . .
because it is based on unverified and admittedly inaccurate
data.” TAG asserted that “Biggs arrives at his nearly $7 million
[damages] figure by simply adopting the numbers that Plaintiffs
provided to him without performing any testing or independent
verification.” TAG explained that Biggs testified he relied
entirely on the Cudahy Breakdown to determine a monthly
profit, and “annualized it to come up with $800,000 in lost profits
for 2018. Biggs then added a 1.5 [percent] escalation rate, year
over year, for 21 years, to derive a gross revenue figure. He then
took the expenses listed on Exhibit 10, extrapolated out those
expenses over a 21[-]year period, and deducted it from the gross
revenues to arrive at a net profit amount.” TAG argued that
Biggs’s opinion assumed the financial data in the Cudahy
Breakdown was true despite the fact that Min, who had prepared
the document, admitted the data was not accurate. TAG pointed
4
out that the total projected annual profit was substantially
greater than the income Min had reported on the laundromat’s
recent tax returns and financial statements. TAG argued that for
Biggs’s testimony to be admissible, Biggs was required to verify
the data. His failure to do so made his projections speculative
and, hence, inadmissible.
TAG continued that Biggs’s “methodology for inventing the
$7 million damages figure is equally flawed. Biggs speculates
that Plaintiffs would have operated the laundromat for 21 years
despite the fact that (1) Plaintiffs had minimal experience in the
laundromat business and (2) there was no guarantee that TAG
would renew the lease.”2 TAG also claimed that (1) Biggs applied
a 1.5 percent sales escalation rate based on general inflation—not
one tied to the laundromat industry; and (2) that his valuation of
the business at $1.4 million in 21 years assumed the landlord
would agree to renew the lease at the end of the 21-year period.
Lastly, TAG argued that Biggs failed to reduce the damages by
the $550,000 down payment plaintiffs would have made if they
had purchased the laundromat business. Biggs appeared to have
admitted this error in his deposition.
In Motion in Limine No. 2, TAG asserted that the Cudahy
Breakdown was hearsay not within any exception, was an
impermissible summary of voluminous documents that were
never produced, and was unreliable and untrustworthy.
Tenant Min created the Cudahy Breakdown and admitted
during his deposition that it “ ‘shows a monthly average. And it’s
not the official money in and out of the bank. It’s just cash in and
2 Because plaintiffs owned the option to renew the lease, we
assume that TAG’s argument was actually that the parties might
not agree upon the rent for the option periods, and hence the
lease would not be extended beyond the original 11 years.
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out. These are just rough numbers.’ ” (Emphasis omitted.) Min
stated that there was “a revised one and the numbers are much
lower. I was a little confused with the one for the prior buyer.
This is the correct one for this buyer.” On the document, the total
income is circled in pen and an adjacent hand-written note reads:
“different from the original, because seller put more coins in the
store.” TAG asserted the document lacked the hallmarks of a
business record because (1) it was created for the purpose of
selling the laundromat to plaintiffs; and (2) plaintiffs had not
produced the underlying documents on which the Cudahy
Breakdown was based.
4. Plaintiffs’ Opposition to the Motions in Limine
In response to Motion No. 1, plaintiffs claimed that “while
Mr. Biggs did not personally analyze and verify the data provided
by Mr. Min in Exhibit 10, he relied on the verification thereof by
Plaintiffs” and by Eastern Funding, plaintiffs’ lender. Plaintiffs
pointed out that they had counted coins three days per week for
several weeks to verify the laundromat’s income. Plaintiff
explained that they “applied for financing from Eastern Funding,
a lender specializing in the purchasing [of] laundromats in
Southern California and in other markets across the country.
Eastern Funding conducted its own due diligence into Mr. Min’s
business, reviewing the utility bills and communicating with
Plaintiffs about the coin counts. Eastern Funding ultimately
prepared its own income and expense projections for the business
and based thereon approved a loan for $1.6 million to Plaintiffs to
purchase Mr. Min’s business.”
In opposing Motion No. 2, plaintiffs argued that the
Cudahy Breakdown was admissible as a business record,
prepared by Min in the ordinary course of business when he was
in the process of selling the business to plaintiffs. Plaintiffs
echoed arguments made in response to the first motion in limine
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regarding how they verified the accuracy of the Cudahy
Breakdown with coin counts and utility bills. Plaintiffs also
asserted that their lender, Eastern Funding, “did an analysis of
Mr. Min’s business to verify the numbers in the Cudahy
breakdown as accurate.” Plaintiffs argued that “an expert may
testify to otherwise inadmissible hearsay used as the basis in
their opinion.”
5. TAG’s Reply
In reply, TAG argued, “It is wholly irrelevant whether
Plaintiffs or Eastern Funding relied upon Exhibit 10 [the Cudahy
Breakdown] for their respective purposes. Biggs’[s] adoption of
the numbers in Exhibit 10 at ‘face value’ without any
independent verification or analysis of their accuracy, while
ignoring evidence to the contrary [Min’s tax returns], renders his
opinion inadmissible.” TAG pointed out that “Biggs did not know
who created Exhibit 10, where the data on Exhibit 10 came from,
how the data for Exhibit 10 was created, or why Exhibit 10 was
created.”3 TAG emphasized that plaintiffs conceded Eastern
3 Biggs testified at deposition: “I don’t know specifically who
prepared [the Cudahy Breakdown], but this was provided to us as
a -- as the financing of -- the loan request, the basis for the loan
request that the Plaintiffs had prepared and the financial
institution had approved.” Biggs later testified the top line
(which showed total sales) in the Cudahy Breakdown was based
on plaintiffs’ coin counts. Defense counsel then informed Biggs
that plaintiffs did not prepare the Cudahy Breakdown and that it
was actually prepared by Min. Biggs stated “You’re telling me
that [the Cudahy Breakdown] was prepared by the -- by the
seller? [¶] . . . [¶] Okay. I was not aware of that. What was
represented to me -- or my belief was that this first of all, was the
financial statement that the Plaintiffs used and -- and believed to
be accurate, and that’s what they were buying the business on.
[¶] So, if the seller prepared this and they believed it to be
7
Funding did not rely on the Cudahy Breakdown, but instead used
utility bills and “plaintiff’s coin counts (which were not
documented) when preparing Eastern Funding’s ‘own income and
expense projections.’ ”
TAG reiterated that the Cudahy Breakdown did not qualify
as a business record, because there was “insufficient evidence of
record keeping practices, the manner in which the Cudahy
Breakdown was prepared, and the sources of information for the
Cudahy Breakdown to support a finding of reliability. . . . [T]he
author of the Cudahy Breakdown [testified] throughout his
deposition that the Cudahy Breakdown is just ‘rough’ numbers
and ‘not the official’ numbers.” The “official” numbers, i.e., tax
returns, showed the laundromat’s profits were several hundred
thousand dollars less than that reported in the Cudahy
Breakdown.
6. The Section 402 Hearing
On September 23, 2019, the trial court held an Evidence
Code section 402 hearing on the two motions. Biggs testified that
he prepared a profit and loss statement with escalation
projections marked as Exhibit 3 based upon the numbers in the
Cudahy Breakdown. Biggs projected that plaintiffs lost a net
profit of $6,966,517 by not being able to purchase and operate the
laundromat. He reached this total by subtracting projected
operating expenses from projected annual sales over a 21-year
period—from 2018 through 2039. Specifically, the Cudahy
Breakdown showed a monthly gross sales figure of $73,120,
which Biggs annualized to come up with $880,000 in lost sales for
2018. He then added a 1.5 percent inflation escalation rate (not
accurate based on their -- their coin counts and their review of
the business, then I’ll accept the fact that they believed that --
that this was accurate on that basis.”
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one tied to the laundromat business), and applied it year over
year, for 21 years. Biggs deducted year-long operating expenses
to generate his projections for the annual profits.4
Biggs also testified he had relied on plaintiffs’ statement
that the numbers in the Cudahy Breakdown were accurate, and
stated it was beyond the scope of his assignment to check the
veracity of those figures. Biggs did not review general ledgers,
utility bills, or any information regarding coin counts. Biggs did
not know who prepared the Cudahy Breakdown at the time he
made the projected profit estimate or at the time of his
deposition. Biggs acknowledged that he disregarded the
handwritten notation on the Cudahy Breakdown that stated that
the financial figures were “different from the original,” “[b]ecause
seller put more coins in the store.”
Biggs testified that he reviewed the laundromat’s historical
financial statements and tax records, but gave little credence to
them because based on his professional experience, he found cash
businesses generally understated their sales figures to reduce tax
exposure. For instance, using the financials and tax records,
Biggs calculated the 2017 income to be just under $600,000. Yet,
in exhibit 3, relying on the Cudahy Breakdown and not the tax
returns or the financial statements, Biggs estimated plaintiffs’
projected total 2018 sales to be $880,000—which was $280,000
more than the seller had reported in the previous year.
Biggs testified that although plaintiffs did not create the
Cudahy Breakdown, he could rely on the document because
plaintiffs represented that the Cudahy Breakdown was accurate.
He relied on the nine to 12 days of coin counting plaintiffs
4 Biggs identified $578,974 as 2018’s operating expenses. He
projected loan payments to end in 2025. Biggs also deducted
$85,000 in annual depreciation.
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conducted during escrow. Biggs did not know the total coin
count, the standards plaintiffs employed during the count, the
methodology plaintiffs used to count coins, or any other
information about the counts. He also had never seen
documentation of the coin count.
Biggs testified that he assumed plaintiffs would operate the
business for 21 years, despite acknowledging that plaintiffs were
new to the business, could wind up in default on the lease, and
could sell the business at any time. Biggs admitted he utilized a
1.5 percent escalation rate untethered to the laundromat
industry. He neither considered local competition nor did he
conduct a market survey. Biggs failed to deduct from his lost
profit analysis the $550,000 down payment that plaintiffs were
required to make if they had purchased the laundromat. Biggs
also assumed the laundromat would have a residual value of $1.4
million after 21 years, despite not knowing whether the parties
would agree to renew the lease after 21 years.
7. The Court’s Ruling
On September 24, 2019, the trial court by minute order
granted TAG’s motions in limine. The court ruled that under
Evidence Code section 801, subdivision (b) and Sargon
Enterprises, Inc. v. University of Southern California (2012)
55 Cal.4th 747, 770 (Sargon), Biggs’s expert opinion testimony
was inadmissible as a matter of law, because it was not based on
matters “of a type that reasonably may be relied upon by an
expert in forming an opinion.”5 The trial court further found
5 Evidence Code section 801, subdivision (b) provides: “If a
witness is testifying as an expert, his testimony in the form of an
opinion is limited to such an opinion as is: [¶] . . . [¶] (b) Based
on matter (including his special knowledge, skill, experience,
training, and education) perceived by or personally known to the
witness or made known to him at or before the hearing, whether
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that: “[T]he Cudahy Breakdown is the only document on which
Biggs relied to establish lost profits. Biggs has acknowledged
that he did nothing to verify the numbers and acknowledged that
Min had testified that the document was ‘unofficial.’ As such, the
pro forma projections, Ex. 3, cannot be relied on. Likewise,
Ex. 10 [the Cudahy Breakdown] has no basis in reality as Min
has acknowledged it as being unofficial and ‘different from the
original.’ ”
8. Entry of Judgment
Following the trial court’s ruling, plaintiffs and TAG
submitted to the court a proposed order on consent to judgment,
which the trial court signed and filed on October 21, 2019. That
order stated that as a result of the trial court’s in limine orders,
plaintiffs “are unable to introduce into evidence any damages at
trial, and unable to prove an essential element of their claim for
Intentional Interference with Contract.” The order acknowledged
that the parties consented to the judgment in TAG’s favor, but
that plaintiffs intended to appeal the court’s in limine orders.
On November 19, 2020, the trial court entered judgment in
TAG’s favor. Plaintiffs filed a timely notice of appeal.
DISCUSSION
Plaintiffs argue that the court erred in sustaining the
motions in limine which had the effect of excluding the Cudahy
Breakdown and Biggs’s testimony.
1. Standard of Review
Although it is well-established that we review evidentiary
rulings for an abuse of discretion (see Sargon, supra, 55 Cal.4th
or not admissible, that is of a type that reasonably may be relied
upon by an expert in forming an opinion upon the subject to
which his testimony relates, unless an expert is precluded by law
from using such matter as a basis for his opinion.”
11
at p. 773; LAOSD Asbestos Cases (2020) 44 Cal.App.5th 475,
485;), plaintiffs argue we should review the ruling de novo
because exclusion of the evidence was tantamount to a grant of
nonsuit. Plaintiffs cite Kinda v. Carpenter (2016)
247 Cal.App.4th 1268, 1279 (Kinda).
In Kinda, defendants moved in limine to exclude posts
made on Yelp.com as unauthenticated. Plaintiffs responded that
the posts could be authenticated under Evidence Code section
1552 (self-authenticating exhibits). (Kinda, supra,
247 Cal.App.4th at p. 1283.) In its ruling, “the trial court rejected
Evidence Code section 1552 and plaintiffs’ proffer as a basis for
authenticating the Yelp reviews, explaining its concern was not
whether the Yelp posts could be authenticated under section 1552
as writings that existed on the Internet under an alias, but
whether the evidence would be sufficient to prove [plaintiffs’]
defamation claim.” (Id. at p. 1285.) The appellate court
explained that the trial court treated “the motion in limine like a
motion for nonsuit, rather than limiting its assessment to the
initial question of whether the documents were sufficient for the
‘trier of fact to find that the writing is what it purports to be.’ ”
(Ibid.) The court explained that when in limine proceedings are
used to foreclose a cause of action, the ruling is subject to de novo
review, as though the court had granted a motion for nonsuit.
(Id. at p. 1279.) We do not find Kinda helpful.
“In limine motions are designed to facilitate the
management of a case, generally by deciding difficult evidentiary
issues in advance of trial. ‘ “The usual purpose of motions in
limine is to preclude the presentation of evidence deemed
inadmissible and prejudicial by the moving party. A typical order
in limine excludes the challenged evidence and directs counsel,
parties, and witnesses not to refer to the excluded matters during
trial. [Citation.] ‘The advantage of such motions is to avoid the
12
obviously futile attempt to “unring the bell” in the event a motion
to strike is granted in the proceedings before the jury.’
[Citation.]” ’ [Citation.] What in limine motions are not designed
to do is to replace the dispositive motions prescribed by the Code
of Civil Procedure.” (Amtower v. Photon Dynamics, Inc. (2008)
158 Cal.App.4th 1582, 1593, emphasis omitted.) Dispositive
motions include “summary judgment, directed verdict, nonsuit,
[and] judgment before presentation of defense evidence.” (Kobzoff
v. Los Angeles County Harbor/UCLA Medical Center (1998)
19 Cal.4th 851, 856.)
In the present case, the trial court did not turn the in
limine proceeding into a motion for nonsuit. Typical of many in
limine proceedings, the trial court ruled on the admissibility of
specific evidence, here expert testimony and a single document.
The court did not preclude plaintiffs from introducing all
evidence of damages. It turned out that plaintiffs had no
evidence once the expert testimony and challenged document
were excluded, and plaintiffs decided not to go forward.
The trial court did not expressly or impliedly grant a
nonsuit– it ruled on the admissibility of evidence. Accordingly,
we review the exclusion of that evidence under the abuse of
discretion standard. (Sargon, supra, 55 Cal.4th at p. 773;
LAOSD Asbestos Cases, supra, 44 Cal.App.5th at p. 485.)
2. The Court Did Not Abuse Its Discretion in Excluding
the Cudahy Breakdown
We begin our review by addressing the court’s exclusion of
the Cudahy Breakdown for the reason that Biggs’s testimony was
based entirely on that exhibit. In People v. Sanchez (2016)
63 Cal.4th 665, 684, our Supreme Court held that, “If an expert
testifies to case-specific out-of-court statements to explain the
bases for his opinion, those statements are necessarily considered
by the jury for their truth, thus rendering them hearsay. Like
13
any other hearsay evidence, it must be properly admitted
through an applicable hearsay exception.” Here, plaintiffs assert
that the Cudahy Breakdown was admissible as a business record
or “as a general compilation of documents.” According to that
argument, the Cudahy Breakdown was admissible and Biggs
could properly give expert testimony based on a document
admitted into evidence.
a. Business Record Exception
Evidence Code section 1271 provides, “Evidence of a
writing made as a record of an act, condition, or event is not
made inadmissible by the hearsay rule when offered to prove the
act, condition, or event if: [¶] (a) The writing was made in the
regular course of a business; [¶] (b) The writing was made at or
near the time of the act, condition, or event; [¶] (c) The custodian
or other qualified witness testifies to its identity and the mode of
its preparation; and [¶] (d) The sources of information and
method and time of preparation were such as to indicate its
trustworthiness.” (See Zanone v. City of Whittier (2008)
162 Cal.App.4th 174, 191.)
Made in the “regular course of business” means the
“writing must be of a type customarily kept by the ‘business’
involved—i.e., it must appear that the business routinely makes a
record of the act, condition or event in question as part of its
regularly-conducted business activities.” (Wegner et al., Cal.
Practice Guide: Civil Trials & Evidence (The Rutter Group 2020)
Ch. 8D-D, ¶ 8:1617.)
“Whether a particular business record is admissible as an
exception to the hearsay rule . . . depends upon the
trustworthiness of such evidence, a determination that must be
made, case by case, from the circumstances surrounding the
making of the record. The foundation for admitting the record is
properly laid if in the opinion of the court, the sources of
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information, method and time of preparation were such as to
justify its admission.” (People v. Zavala (2013) 216 Cal.App.4th
242, 246 [citation and internal quotation marks omitted].) “The
trial court has wide discretion to determine whether there is a
sufficient foundation to qualify evidence as a business record; we
will overturn its decision to admit such records only upon a clear
showing of abuse.” (Conservatorship of S.A. (2018)
25 Cal.App.5th 438, 447.)
Based on the evidence at the Evidence Code section 402
hearing, the trial court did not abuse its discretion in concluding
the Cudahy Breakdown was neither trustworthy nor made in the
regular course of business. Plaintiffs provided no evidence
explaining how the document was prepared or the origin of the
raw numbers. When questioned at his deposition, Min
essentially debunked that the Cudahy Breakdown was a business
record by testifying: “It shows a monthly average. And it’s not
the official money in and out of the bank. It’s just cash in and
out. These are just rough numbers.” Min explained, “there is a
revised one and the numbers are much lower. I was a little
confused with the one for the prior buyer. This is the correct one
for this buyer.” Min’s testimony was that he prepared the
document in anticipation of selling the business to a particular
buyer, and not as part of a business routine or regular act. The
trial court reasonably found significant that adjacent to the total
income, which is circled on the Cudahy Breakdown, there was an
unexplained handwritten note from an unidentified person,
stating “different from the original, because seller put more coins
in the store.”
The trial court could reasonably have interpreted Min’s
testimony to mean that Min inflated the income in preparing the
accounting for plaintiffs, and could have found that the numbers
in the Cudahy Breakdown were untrustworthy. As the court
15
bluntly put it: “Likewise, Ex. 10 [the Cudahy Breakdown] has no
basis in reality as Min has acknowledged it as being unofficial
and ‘different from the original.’ ”
Separately, the trial court’s ruling is supported by
plaintiffs’ failure to produce documentation supporting Min’s
“rough numbers.” Biggs testified: “I asked if there were any
general ledgers and other documents that there might – might
exist for the business, but none – none existed.” “The bottom line
foundational requirement is that the ‘sources of information and
method and time of preparation [of the record] were such as to
indicate its trustworthiness.’ ” (Wegner et al., Cal. Practice
Guide: Civil Trials & Evidence (The Rutter Group 2020) Ch. 8D-
D, ¶ 8:1644 (emphasis in original).) The absence of the
laundromat’s ledgers and accurate documentation of income were
other indices that the Cudahy Breakdown was unreliable hearsay
and not admissible.
To the extent plaintiffs claim their lender, Eastern
Funding, “did an analysis of Mr. Min’s business to verify the
numbers in the Cudahy breakdown as accurate,” there was no
evidence that the lender participated in the preparation of the
Cudahy Breakdown. The trial court could have reasonably found
that Eastern Funding’s independent evaluation of the numbers
did not show that the sources of information and method and
time of preparation demonstrated the trustworthiness of the
Cudahy Breakdown.
The court did not abuse its discretion in finding that the
Cudahy Breakdown was not a business record.
b. Summary of Voluminous Records Exception
Alternatively, plaintiffs contend that the Cudahy
Breakdown was admissible as a compilation of voluminous
records, citing Heaps v. Heaps (2004) 124 Cal.App.4th 286, 293
(Heaps). First, we observe that plaintiffs did not make this
16
argument in the trial court. Plaintiffs’ failure to raise this issue
below forfeits it on appeal. (Wood v. Santa Monica Escrow Co.
(2007) 151 Cal.App.4th 1186, 1192.)
Second, plaintiffs cite Heaps for the principle that a
summary of voluminous records is admissible where the original
records “could not be examined individually by the court without
great loss of time.” (Heaps, supra, 124 Cal.App.4th at p. 293.)
Plaintiffs provided no evidence that a year’s worth of monthly
income and loss statements from 2017 would be too numerous for
the trial court or jury to review. Plaintiffs’ voluminous records
exception simply does not pass muster.
3. The Court Did Not Abuse its Discretion in Excluding
Biggs’s Testimony
In Sargon, the California Supreme Court explained that
“under Evidence Code section 801, the trial court acts as a
gatekeeper to exclude speculative or irrelevant expert opinion.
. . . ‘[T]he expert’s opinion may not be based “on assumptions of
fact without evidentiary support [citation], or on speculative or
conjectural factors. . . . [¶] Exclusion of expert opinions that rest
on guess, surmise or conjecture [citation] is an inherent corollary
to the foundational predicate for admission of the expert
testimony: will the testimony assist the trier of fact to evaluate
the issues it must decide?” ’ ” (Sargon, supra, 55 Cal.4th at
p. 770.)
Here, Biggs’s entire opinion was based on what the trial
court correctly determined was inadmissible hearsay—the
Cudahy Breakdown. That document’s exclusion eliminated the
“evidentiary support” for Biggs’s profit and loss projections.
Biggs provided no other foundation for the numbers he used in
making such projections, instead testifying that it was outside
the scope of his employment to verify the laundromat’s income
and expenses. Therefore, the trial court did not err in finding
17
Biggs’s testimony speculative and inadmissible under Sargon and
Evidence Code section 801.
Plaintiff also argues that, “the information contained
within Ex.10 could have been derived from seller on the stand.”
Perhaps true in theory, but that is belied by what happened at
Min’s deposition. Min’s testimony that the Cudahy Breakdown
contained “just rough numbers” negated the accuracy of the
information. Neither at the Evidence Code section 402 hearing
nor in the opposition papers, did plaintiffs offer additional
testimony from Min describing the factual basis for the numbers
contained in the Cudahy Breakdown.
DISPOSITION
The judgment is affirmed. Respondent TAG Enterprises,
LLC shall recover its costs on appeal.
RUBIN, P.J.
WE CONCUR:
BAKER, J.
KIM, J.
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