Union Patriot Capital Mgmt. II v. Del Castro

1

UNION PATRIOT CAPITAL MANAGEMENT II, LLC et al., Plaintiffs and Respondents, v. RICHARD RIONDA DEL CASTRO et al., Defendants and Appellants.

UNION PATRIOT CAPITAL MANAGEMENT II, LLC et al., Plaintiffs and Respondents, v. RICHARD RIONDA DEL CASTRO et al., Defendants and Appellants.

B322811, B324476, B322831, B324421

California Court of Appeals, Second District, Fifth Division

December 3, 2024

NOT TO BE PUBLISHED

APPEALS from judgments and orders of the Superior Court of Los Angeles County, Nos. BC687697, BC681300 Barbara M Scheper, Judge. Affirmed.

Law Offices of Douglas G. Webber and Douglas G. Webber, Hamrick &Evans and A. Raymond Hamrick, III for Defendants and Appellants.

Daniels, Fine, Israel, Schonbuch &Lebovits and Maureen M Michail; Jung &Yuen and Curtis C. Jung, for Plaintiffs and Respondents.

KIM (D.), J.

I. INTRODUCTION

In this consolidated appeal, defendants Richard Rionda Del Castro (Richard), Patricia Eberle Rionda Del Castro (Patricia), and Hannibal Media, Inc. dba Hannibal Pictures (Hannibal Media) appeal from judgments following a bench trial and subsequent orders. At trial, plaintiffs^[1] prevailed against Hannibal Classics, Inc. (Hannibal Classics), Marco Polo Production SAS (Marco Polo), and USS Indianapolis Production, Inc. (USSIP), on breach of contract and tort claims.^[2] Plaintiffs then successfully sought to amend the judgment to add the appealing defendants as judgment debtors under an alter ego theory of liability. Plaintiffs also filed an affidavit of identity that listed a spendthrift trust and Richard as the trustee of that trust as alternate names for Richard.

On appeal, Richard and Patricia argue that the trial court denied them their right to a jury trial, violated their due process rights during trial, and erred by finding them liable under an alter ego theory for Hannibal Classics's acts. They also challenge the calculation of damages and an attorney fees award. Richard additionally argues that the court erred by not vacating the affidavit of identity. Finally, Hannibal Media argues the court erred by amending the judgments to add it as a judgment debtor. We affirm the judgment and challenged orders.

II. BACKGROUND

A. Summary of Dispute^[3]

Various plaintiffs entered into agreements with various corporate entities that were owned and controlled by Richard and Patricia, in connection with the production and distribution of two films. On June 19, 2015, Union Patriot II entered into a financing agreement with USSIP, pursuant to which Union Patriot II agreed to and did loan $14,556,044.72 to USSIP for the production of the film USS Indianapolis: Men of Courage (USS Indianapolis film). On that same date, Union Patriot II entered into a sales agency interparty agreement with Hannibal Classics, pursuant to which Hannibal Classics agreed to act as a sales agent for Union Patriot II and to distribute the USS Indianapolis film in territories outside of North America. Instead of repaying the loan or paying Union Patriot II money due under the sales agreement, Richard and Patricia used the funds for their own financial gain.

On February 3, 2016, Justice and Union Patriot II entered into a sales agency agreement with Hannibal Classics for the film Vengeance: A Love Story (Vengeance film). Justice and Union Patriot II agreed to produce and finance the Vengeance film in exchange for Hannibal Classics's agreement to distribute the film in territories outside of North America. Hannibal Classics, through Richard and Patricia, promised to secure minimum guaranteed payments from foreign distributors and to wire those payments to a third-party account. Instead, Hannibal Classics, at Richard's direction, sold the Vengeance film to foreign distributors and directed the distributors to pay the money directly into Hannibal Classics's account.

B. Procedural History before Trial

1. Case No. BC687697-USS Indianapolis Film

On May 18, 2018, plaintiffs^[4] filed the operative first amended complaint against Richard, Patricia, Hannibal Classics, and USSIP alleging causes of action for fraud, breach of contract, conversion, interference with contract, breach of guaranty, imposition of a constructive trust, and accounting.

2. Case No. BC681300-Vengeance Film

On April 25, 2018, plaintiffs^[5] filed the operative second amended complaint against Richard, Patricia, Marco Polo, and Hannibal Classics. That complaint alleged causes of action for breach of contract, interference with contract, conversion, fraud, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, imposition of a constructive trust, and accounting.

3. Defense Counsel Relieved

All defendants, including the appealing defendants, were initially represented by counsel in these matters. But, by August 2020, counsel for all the defendants were either relieved or substituted out such that the corporate defendants were unrepresented and Richard and Patricia appeared in propria persona.

4. Trial Setting Conference and Consolidation for Trial

The trial court conducted a trial setting conference on October 8, 2020, and set the matters for final status conference on July 9, 2021, with trial scheduled to begin on July 19, 2021. The record does not include a reporter's transcript of the October 8, 2020, proceeding, but a minute order reflects that Richard and Patricia appeared at that conference. The court advised the parties that they were required to comply with Superior Court of Los Angeles County, Local Rules, rule 3.25 (Local Rule 3.25), which requires that parties file certain documents, such as jury instructions, witness lists, and exhibit lists, five days prior to the final status conference. The court also advised the parties that corporate defendants could only appear at trial through counsel.^[6]

On November 16, 2020, the trial court consolidated the USS Indianapolis film case and Vengeance film case for purposes of trial.

On June 18, 2021, the trial court continued the final status conference to July 19, 2021.

On July 9, 2021, plaintiffs filed a pretrial status report, notifying the trial court that they were ready to proceed with trial, and wished to waive their right to a jury trial.

On July 13, 2021, Richard and Patricia filed their pretrial status report, stating that they did not and had not waived their right to jury trial. They also requested a trial continuance.

On July 14, 2021, plaintiffs submitted their trial exhibit and witness lists.

5. July 19, 2021, Final Status Conference

On July 19, 2021, plaintiffs, Richard, and Patricia appeared before the trial court for a final status conference. The court reminded Richard and Patricia that they could not represent the corporate defendants at trial. The court also observed that defendants had failed to submit any trial documents, such as jury instructions, verdict forms, and statements of the case. (See Local Rule 3.25(f) [failure to comply can result in waiver of jury trial].) The court advised Richard and Patricia that, because they had failed to timely submit a witness list, they could not call any witnesses other than themselves at trial. It then ordered Richard and Patricia to submit their exhibit list by July 20, 2021, and continued the trial to August 16, 2021.

6. Relief from Jury Trial Waiver

On July 20, 2021, Richard filed trial exhibit and witness lists.

On July 26, 2021, Richard and Patricia moved for relief from jury trial waiver.

On August 10, 2021, the trial court reversed its earlier finding of jury trial waiver. It then set the following schedule for resolving the pending claims: the parties would first proceed to a bench trial on the claims against the corporate defendants; then they would continue with a bench trial on the issue of alter ego liability; and finally, they would proceed to a jury trial on the claims against Richard and Patricia, if necessary. The court further ruled that Richard and Patricia would be permitted to participate in the bench trial as to issues of alter ego liability. The court denied any further continuances.

7. Hannibal Classics's Bankruptcy and Automatic Stay

On August 16, 2021, Richard orally advised the trial court that Hannibal Classics had declared Chapter 7 bankruptcy the prior day. The court observed that it had not received any documents regarding the bankruptcy proceeding and would therefore continue with the bench trial. Later that afternoon, Patricia filed a notice of automatic stay pursuant to the bankruptcy proceeding.

On August 17, 2021, plaintiffs' counsel argued that, notwithstanding the existence of the bankruptcy stay, the trial court could proceed on causes of action that named Hannibal Classics as a defendant, so long as the court did not enter a judgment against it. The court agreed with plaintiffs' position and continued with the bench trial.

On August 18, 2021, the parties completed the trial against the corporate defendants and began the trial on alter ego liability.

On August 19, 2021, plaintiffs' counsel notified the trial court that Richard, without leave of the bankruptcy trustee, had filed a motion for sanctions in bankruptcy court, which was set for September 14, 2021. Plaintiffs requested and the court granted a continuance of the trial proceedings.

After the bankruptcy court denied Richard's motion for sanctions, the trial court resumed the trial on October 4, 2021, and concluded trial that day.

8. Alter Ego

The alter ego liability portion of the trial commenced on August 18, 2021. The trial court permitted Richard and Patricia to call only themselves as witnesses. But it allowed them to cross-examine the plaintiffs' sole witness.^[7]

On October 4, 2021, plaintiffs' counsel advised the trial court that Richard had not produced to...