Procedural Posture

Procedural Posture

Defendant majority shareholder appealed from a judgment of the Superior Court of San Diego County (California) entered against him in three consolidated actions involving disputes between him and plaintiff minority shareholders. The actions involved disputes over the ownership of a family company and its subsidiary and the majority shareholder’s alleged conversion of corporate assets for his personal use.

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Overview

The trial court determined that all of the claims were equitable and that the jury’s verdict was therefore merely advisory. Contrary to the jury’s verdict, the trial court found that the shares of the common stock in dispute were owned by one of the minority shareholders. The court held that the majority shareholder was not entitled to a jury trial on the issue of ownership of the common stock. The possession exception to the equitable nature of a quiet title action did not apply because the action involved intangible personal property; the action was a dispute over ownership of the stock, not possession; and the minority shareholders did not seek possession of the stock in their complaint. The trial court did not abuse its discretion in excluding under Cal. Evid. Code § 1152 an e-mail from one of the minority shareholders because the e-mail was connected to an attempt to compromise and was not independent of an offer to compromise. The trial court properly determined the majority shareholder’s financial condition before it awarded punitive damages. There was no right to a jury trial of equitable shareholder derivative claims in California, even where punitive damages were sought.

Outcome

The court affirmed the judgment.

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