[00:00:18] Speaker 04: Good morning, your honors. [00:00:20] Speaker 04: I'd like to reserve seven minutes for rebuttal. [00:00:25] Speaker 01: All right. [00:00:27] Speaker 04: My name is Philip Dyson. [00:00:29] Speaker 04: I represent the appellants in this matter, excuse me, the old gringo business entities, as well as the individual defendants, Ernest Theroux and Jan Ferry. [00:00:42] Speaker 04: There's three issues here that I think as a matter of law this court needs to address to either reverse the judgment which has been entered against the defendants in the entirety or reduce it substantially. [00:00:54] Speaker 04: The first I'd like to talk about is the amount of economic damages. [00:01:00] Speaker 04: The history is the jury came back with a verdict a little in excess of $1,200,000. [00:01:07] Speaker 04: The district court rightfully so found there was insufficient evidence to support this verdict and vacated it. [00:01:16] Speaker 04: And what did it do? [00:01:18] Speaker 04: It looked at the period from January 2013 till September of 2015 during the time Ms. [00:01:28] Speaker 04: Wright worked at Old Gringo after the time that she was allegedly gifted this 5%. [00:01:35] Speaker 04: took what the benefit was that she got from Old Gringo, from the salary and bonuses, versus the detriment that she was able to prove. [00:01:47] Speaker 04: Now, that's critical here for my analysis as I get later on. [00:01:53] Speaker 04: Never in the seven years of this litigation, seven, did the Miss Wright allege [00:02:03] Speaker 04: that her reliance period was any less than from January 2013 through September of 2015. [00:02:14] Speaker 04: Not a once. [00:02:15] Speaker 04: You won't see it in the pleadings. [00:02:18] Speaker 04: You won't see it in the trial transcripts. [00:02:20] Speaker 04: You won't see it in the arguments. [00:02:23] Speaker 04: And the district court came to a calculation that from the period of January 2013 to September of 2015, Miss Wright actually got a benefit in excess of actually $377,260 more in benefit in total than detriment. [00:02:46] Speaker 04: That's absolutely correct. [00:02:49] Speaker 04: And the district court should have stopped then and there [00:02:52] Speaker 04: and entered judgment on behalf of the defendants. [00:02:56] Speaker 04: But it didn't. [00:02:59] Speaker 04: Instead, the district court only looked at 2013. [00:03:01] Speaker 04: It looked at what her interest in game day was during that period versus the salary she had got and found that she had damages of $157,500. [00:03:19] Speaker 04: Now as I stated earlier, you will not find one scintilla of evidence that Ms. [00:03:26] Speaker 04: Wright ever alleged that 2-13 was only the time period. [00:03:30] Speaker 04: In fact, you will never see in any of the calculations and damages which are required in federal court for only 2013, only the district court did so. [00:03:44] Speaker 04: Why? [00:03:44] Speaker 04: We don't know. [00:03:47] Speaker 04: Maybe it was because Miss Wright proffered alleged damages for the 14 and 15 period, which the district court said were counterfactual, speculative, and inadmissible. [00:04:03] Speaker 04: I submit to you, it's not our burden. [00:04:06] Speaker 04: It's not the defendant's burden to submit what Miss Wright damages her. [00:04:12] Speaker 04: That's her burden approved for that period. [00:04:15] Speaker 04: She didn't. [00:04:16] Speaker 04: What we did is we submitted the benefit that she got during that time period. [00:04:24] Speaker 04: I have argued, we have argued in our brief, the Blanton case is specific on this. [00:04:29] Speaker 04: Blanton versus mobile oil. [00:04:32] Speaker 04: Now in that case went over an eight year period. [00:04:36] Speaker 04: And what happened is in that one, the jury came up with a damage analysis on a yearly basis. [00:04:44] Speaker 04: When they found that there was no damages, or actually a benefit to the plaintiff by the defendant's behavior, they put zero in the jury verdict. [00:04:54] Speaker 04: The Blanton court said, that's not the way you do it. [00:04:58] Speaker 04: You have to look at the totality of it. [00:05:01] Speaker 04: If you have a gain in one year, and you have a detriment in another year, in net, [00:05:07] Speaker 04: You add them up and you come to a figure at the end. [00:05:10] Speaker 01: But isn't Blanton distinguishable because Blanton itself involved a multi-year contract and you don't have a multi-year contract here? [00:05:20] Speaker 04: In this we had a contract, Your Honor, that Ms. [00:05:22] Speaker 04: Wright stayed there based on what she said was her alleged detriment. [00:05:29] Speaker 04: In the Blanton case, yes, it went over a time period, but in this case here, she stayed in those years and she said that that was part of the, quote, reliance contract that she had with Old Gringo to stay there during that period as an owner. [00:05:47] Speaker 04: She alleged that, she pleaded, and she testified to it. [00:05:54] Speaker 04: I think, Your Honor, the district court got it right when it added in the time period. [00:06:00] Speaker 04: The issue, Your Honor, is if you take the argument that there's no eight-year contract as there was in Blanton here, [00:06:12] Speaker 04: How could you have a reliance period that's measured by the time Miss Wright was there? [00:06:19] Speaker 04: That's the appropriate time period. [00:06:22] Speaker 04: Miss Wright said she stayed there for that entire period, from January 2013 till she left Old Gringo in September 2015, based on her reliance that she had been made an owner. [00:06:37] Speaker 04: She had said, oh, I was told, you know, I was an owner. [00:06:40] Speaker 04: Work harder and do all of that during that time period. [00:06:50] Speaker 04: I believe, Your Honor, based on that, there should be no economic damages awarded to Ms. [00:06:56] Speaker 04: Wright in totality during that time period. [00:07:00] Speaker 04: There being no economic damages, there cannot be any emotional distress damages. [00:07:07] Speaker 04: no punitive damages, and the lower court should have entered judgment for the defendants at that point in time. [00:07:19] Speaker 04: Turning now, Your Honor, to the second point, which is the emotional distress damages. [00:07:25] Speaker 04: If the court leaves the economic damages, affirms them as they are, [00:07:31] Speaker 04: I think the emotional distress damages should be reversed as a matter of law. [00:07:38] Speaker 04: And why is that? [00:07:38] Speaker 04: 3343 of the California Civil Code talks about the allowable measure of damages in cases involving the purchase sale or exchange of property. [00:07:53] Speaker 04: That's what we have in this case. [00:07:55] Speaker 04: And the case is cited, talk about that. [00:07:59] Speaker 04: The trial court erred when it held that 3343 didn't apply to Miss Wright's claims. [00:08:06] Speaker 04: The district court said in its response in the post-trial motions that the defendants had cited no authority regarding the applicability of 3343. [00:08:15] Speaker 04: That's true, Your Honor, because it'd trial everyone, including Miss Wright, [00:08:23] Speaker 04: The defendants and the district court took the position that 3343 did apply. [00:08:30] Speaker 04: And what's the evidence of that? [00:08:32] Speaker 04: Prior to trial, Ms. [00:08:34] Speaker 04: Wright argued extensively in her proposed jury instructions that 3343 is applicable to this case. [00:08:43] Speaker 03: But she also sought a motion. [00:08:45] Speaker 03: When I looked at the record on this and I read everything, I was confused by the record in a couple of ways because the substantive jury instructions on the misrepresentation claims, and there's a couple of them, don't look like they're 33-43 jury instructions. [00:09:02] Speaker 03: And then you get to the damages instruction and it's certainly not a 33-43 [00:09:06] Speaker 03: a jury instruction on damages and there's another one that was that the district judge didn't give and then at the end of the day the judge said, you know, this wasn't a 33-43 claim. [00:09:17] Speaker 03: And it didn't read like one when I read the jury instructions and I also didn't see an objection. [00:09:21] Speaker 03: I know there was an objection initially when you submitted jury instructions to the court [00:09:27] Speaker 03: But then when the court went through each jury instruction and got to the one about damages and there was emotional distress damages included, I didn't see an objection to say, wait a minute, you can't do that. [00:09:38] Speaker 03: 3343 is clear, no emotional distress damages. [00:09:42] Speaker 03: So I'm confused by the record on this and I guess, [00:09:48] Speaker 03: it looks to me like this did go to the jury for the reasons that I said on a claim that was just a general misrepresentation or fraud claim, and it wasn't limited to this 33-43 claim. [00:09:59] Speaker 03: And so can you help me understand why I'm wrong about that? [00:10:02] Speaker 04: Well, I don't think you're wrong, Your Honor. [00:10:04] Speaker 04: I think you've got it right in that there. [00:10:06] Speaker 04: First, there was a written objection which we made to that was overruled, which was subsumed when we got to the jury instructions. [00:10:14] Speaker 04: Correct. [00:10:15] Speaker 04: We always maintain regarding that there. [00:10:18] Speaker 04: What I think happened here is that the 3343, we went through those instructions and the court then crafted their own instruction from it, which we had already made the written objection regarding it. [00:10:32] Speaker 04: We didn't have to go back on the record regarding it at that time. [00:10:36] Speaker 04: But we felt that then as well as now as a matter of law, emotional distress damages were not available. [00:10:45] Speaker 04: And that's what we've argued to the court in the post trial motions as a matter of law. [00:10:51] Speaker 04: I think you made a good point regarding the fraud. [00:10:54] Speaker 04: Let's talk about that there because we can jump to that. [00:10:58] Speaker 04: Under 3343, we know emotional distress damages are not allowed, period. [00:11:03] Speaker 04: Now we get to just garden variety fraud. [00:11:06] Speaker 04: And common law is that emotional distress damages are generally [00:11:12] Speaker 04: not recoverable unless it's under certain, very distinct circumstances, which are very rare, those being intentional outrageous conduct, trespass or nuisance, or insurance bad faith. [00:11:27] Speaker 04: None of those exceptions apply in this case here, Your Honor. [00:11:31] Speaker 04: I think the court took the inverse that, oh, under fraud, emotional distress damages are generally allowed. [00:11:39] Speaker 04: Under common law fraud, [00:11:41] Speaker 04: They are not unless those particular circumstances are met. [00:11:46] Speaker 04: And in this case, they're not. [00:11:48] Speaker 04: This is a garden variety business dispute case, Your Honor. [00:11:52] Speaker 04: That's all it is. [00:11:53] Speaker 02: And so, Counsel, there's a case that the other side called Sprague. [00:11:59] Speaker 02: That's the car repair case where the Court of Appeal in California said that even, you know, it's a business dispute. [00:12:07] Speaker 02: You bring your car in for repairs and the car isn't repaired. [00:12:10] Speaker 02: In that case, they did allow emotional distress damages. [00:12:14] Speaker 02: So how would you distinguish the Sprague case from our situation here? [00:12:18] Speaker 04: Sprague is entirely the facts of that, Your Honor, have no relevance in this case here. [00:12:25] Speaker 04: They don't meet that in Sprague. [00:12:27] Speaker 04: They went back and forth. [00:12:29] Speaker 04: She kept going back and forth to get it repaired. [00:12:32] Speaker 04: She took it in. [00:12:33] Speaker 04: They said they repaired it. [00:12:35] Speaker 04: They gave it back to her. [00:12:36] Speaker 04: It didn't work. [00:12:37] Speaker 04: She went in. [00:12:38] Speaker 04: They said it was repaired. [00:12:40] Speaker 04: They came back again. [00:12:41] Speaker 04: It didn't work. [00:12:42] Speaker 04: It was a number of times that it came back and forth. [00:12:45] Speaker 04: So it's the act of not the repair, but the act of the representation that was done on numerous occasions over this period of time that they found was the outrageous conduct. [00:12:57] Speaker 04: You don't have that here, Your Honor. [00:12:59] Speaker 04: You don't have those facts in this case. [00:13:02] Speaker 04: There's no finding by the jury that they were asked to find that this was outrageous conduct by the defendants in this case as to misright. [00:13:13] Speaker 02: I guess what I'm trying to understand, I appreciate the distinction, but in that case, they said 3343 did not apply. [00:13:20] Speaker 02: And I did not read the case to suggest that there was an exception to 3343 for outrageous conduct. [00:13:26] Speaker 02: It just said it didn't apply. [00:13:27] Speaker 02: And so I'm trying to understand, from a legal basis, is there a way legally to distinguish Sprague from our case? [00:13:35] Speaker 02: Is it a different type of business transaction, or is it just the factual distinction you made? [00:13:40] Speaker 04: No, it is a different type of business transaction. [00:13:43] Speaker 04: What I believe is 33-43 does apply, Your Honor, but if it doesn't, as one of the justices talked about earlier, and we use that example that the instructions of 33-43 were not given, that we go to just basically common law fraud. [00:14:02] Speaker 04: We default to that then. [00:14:04] Speaker 04: That possibly maybe that's what [00:14:06] Speaker 04: was brought in this case here under that you would have to meet one of the three exceptions which i don't think this case meets so do you agree that the instructions that were given were as you term it garden variety fraud correct and they were not thirty three forty three well i i think we we objected to thirty three we objected that the language regarding the emotional distress [00:14:30] Speaker 04: taken out as a matter of law should not have been allowed to go to the jury. [00:14:35] Speaker 04: I think that 3343 should have been the instruction regarding it without the emotional distress because of the transaction. [00:14:43] Speaker 04: I think the court's drafting of the combined motion, Your Honor, was error as a matter of law. [00:14:49] Speaker 03: So let me give you a hypothetical, and my question is going to eventually ask you if this is a case that would be subject to 3343. [00:14:57] Speaker 03: So that's what I'm asking about. [00:14:59] Speaker 03: So say it was a two-partner law firm, and they had an associate, and they told their associate, if you bill your hours for the next two years, we will make you a partner. [00:15:07] Speaker 03: And as they're going through the two years, they tell them repeatedly, you're going to be a partner. [00:15:11] Speaker 03: You're doing great. [00:15:12] Speaker 03: He gets to the two-year point. [00:15:13] Speaker 03: He's billed all his hours. [00:15:15] Speaker 03: And they said, we never said that. [00:15:16] Speaker 03: And then there's emails at service that show they said it and they absolutely intended to defraud him. [00:15:22] Speaker 03: Is that a 33-43 claim? [00:15:25] Speaker 04: Your Honor, you've fallen into the trap of the police [00:15:31] Speaker 04: brief, where they say there was a promise to do something 40 or 50, it's actually 63 times in total in the brief. [00:15:40] Speaker 03: And I know my facts are a little different. [00:15:42] Speaker 04: I'm sorry, excuse me, Your Honor. [00:15:44] Speaker 03: I know my facts are a little different than the case here, but is that a 33-43? [00:15:48] Speaker 04: That may go into promissory estoppel, which may be outside of 3343, because in this case there was an immediate transfer, according to Miss Wright, of an interest, which is defined by 3343, and the case is cited, Your Honor, in that. [00:16:05] Speaker 04: Ms. [00:16:05] Speaker 04: Wright said, Your Honor, that she was made an owner of Old Gringo at that meeting, that she could have left the next day with that interest, and she still would have been an owner of Old Gringo. [00:16:17] Speaker 01: Not that she- You wanted to save seven minutes? [00:16:20] Speaker 01: You wanted to save seven minutes. [00:16:21] Speaker 01: You're down to four. [00:16:23] Speaker 04: I am. [00:16:25] Speaker 04: Thank you. [00:16:25] Speaker 01: You still want to save? [00:16:26] Speaker 04: No, I'll go on and I'll save just less than that. [00:16:30] Speaker 04: In this case here, Your Honor, she was given that interest immediately. [00:16:34] Speaker 04: That's the 3340 case distinctly, and we made those objections at the time, and I think that that's the instruction that should have went regarding it. [00:16:44] Speaker 04: The last is the GIF law, and that one's simple. [00:16:48] Speaker 04: Gordon V. Barras couldn't be more on point. [00:16:51] Speaker 04: The gift law is set up to protect the donors in this situation where an alleged oral gift is made, requires some kind of written evidence. [00:17:01] Speaker 04: There's not one scintilla, stock certificate, corporate entry, tax return, not a piece of evidence, the back of a napkin, email back and forth, anything. [00:17:12] Speaker 04: And what the court said is, the court said, gift law does not apply. [00:17:16] Speaker 04: to fraud. [00:17:18] Speaker 04: There is no law to that effect. [00:17:19] Speaker 04: In fact, I would submit to you, Your Honors, that's exactly why the reason is, because you have a he said, she said situations, which deals specifically with fraud in that regard, and that based on that alone, this court should reverse judgment. [00:17:35] Speaker 04: I'll reserve the rest of my time. [00:17:36] Speaker 01: Thank you. [00:18:00] Speaker 00: Good morning, Your Honors. [00:18:01] Speaker 00: May I proceed? [00:18:02] Speaker 00: Good morning. [00:18:03] Speaker 00: May it please the Court, Your Honors. [00:18:04] Speaker 00: My name is Matthew Norris. [00:18:05] Speaker 00: I have the privilege of representing Marcia Wright, who is the plaintiff in the case below, is the appellee today on the original appeal and also has the cross appeal. [00:18:16] Speaker 00: Rather than try to reserve any of my time, what I'm going to do is rebut the original appeal, which I think my colleague Mr. Dyson reduced to his three issues very succinctly. [00:18:29] Speaker 00: And then if the court is satisfied with my discussion on that, then I'll transition into the cross appeal unless the court has something different in mind. [00:18:39] Speaker 00: And so I'll go ahead and proceed that way. [00:18:41] Speaker 00: And obviously, the court will be the ultimate arbiter of how I use my time. [00:18:46] Speaker 00: Let me take the issues in reverse order. [00:18:50] Speaker 00: And I think that Mr. Dyson raised them. [00:18:53] Speaker 00: And I think they're fairly easy. [00:18:56] Speaker 00: The problem with the application of gift law, actually there are several problems with the application of gift law in this case. [00:19:02] Speaker 00: And the first is that Ms. [00:19:04] Speaker 00: Wright never raised it. [00:19:06] Speaker 00: She never attempted to recover on gift law. [00:19:09] Speaker 00: And it was not included in the jury instructions for that reason. [00:19:12] Speaker 00: The defendants do not get to choose plaintiff's remedy. [00:19:17] Speaker 01: What was this? [00:19:18] Speaker 01: Was it a gift? [00:19:20] Speaker 01: Was it a transfer for value? [00:19:22] Speaker 01: Or was it a fraudulent misrepresentation? [00:19:25] Speaker 00: It was a promise. [00:19:27] Speaker 01: So the case was tried on the theory that this was a promise. [00:19:35] Speaker 01: fraudulent. [00:19:38] Speaker 01: Did it sound in fraud? [00:19:40] Speaker 00: Yes. [00:19:41] Speaker 00: Yes, it did, Your Honor. [00:19:42] Speaker 00: And not to jump into my cross appeal, but there were actually two aspects of the case. [00:19:49] Speaker 00: There was both a set of legal remedies, and those all sounded in essentially fraud. [00:19:53] Speaker 00: We had negligent misrep, intentional misrep, and also concealment. [00:19:58] Speaker 00: But everything sounded in fraud that was presented to the jury in a non-advisory capacity. [00:20:03] Speaker 00: presented to the jury in an advisory capacity only were promissory estoppel and unjust enrichment. [00:20:09] Speaker 00: Now on the equity side, which was tried to the honorable district court, we had promissory estoppel, unjust enrichment, specific performance, as well as a couple of other claims that I haven't bothered to raise here or discuss in the cross-appeal. [00:20:23] Speaker 00: So yeah, this was a false promise. [00:20:26] Speaker 00: It was a promise that was not kept. [00:20:29] Speaker 00: And it certainly wasn't a gift. [00:20:31] Speaker 00: No one testified telling me that it was a gift. [00:20:34] Speaker 00: Certainly Ms. [00:20:35] Speaker 00: Wright didn't testify that it was a gift. [00:20:37] Speaker 00: And they didn't testify that it was a gift either. [00:20:40] Speaker 00: And that leads me into my next problem with the gift theory, which is that it's a little bit of a, and I mean no offense to the Old Gringo parties or their council, but it strikes me as a little bit of a retroactive conception [00:20:57] Speaker 00: of what actually happened at trial. [00:20:59] Speaker 00: If this were really a gift and if there were a delivery problem, you would have expected testimony to that effect at trial and there was none. [00:21:07] Speaker 00: I'm not sure that the word gift even appeared in the trial transcript except from counsel. [00:21:12] Speaker 00: I don't believe that anyone ever said the word gift, any witness ever said the word gift and certainly we didn't argue it. [00:21:20] Speaker 00: The other problem with gift law, very briefly, is that if you [00:21:25] Speaker 00: subject this case to gift law, then by logical extension, you would enable gift law to swallow promisory estoppel, you would enable it to swallow fraud, you would enable it even to swallow some breach of contract claims, because all a false promisor would have to do when confronted on the promise in litigation would be to take a step back and say, oh, wait a minute, I intended that to be a gift, [00:21:54] Speaker 00: there's no evidence that I did so but I intended that to be a gift and as a result there was no delivery and so you have an attempt to import retroactively gift law into the case but it's also done in a way that frankly without trying to overstate the matter is fairly insidious because it would enable any false promisor to later claim in litigation whether at the trial stage or apparently here at the appellate stage [00:22:24] Speaker 00: their false promise because it was not executed, and the reason why it wasn't executed was because it was false, was meant to be a gift. [00:22:31] Speaker 00: And that cannot be the law we submit, and gift law cannot be that broad and swallow up basically every other doctrine relating to false promises. [00:22:43] Speaker 00: I think I can turn very, very briefly to the emotional distress argument. [00:22:48] Speaker 00: I think we had some excellent questions [00:22:52] Speaker 00: there from the panel. [00:22:54] Speaker 00: This wasn't a 33-43 claim. [00:22:57] Speaker 00: And so again, you have a situation similar to GIF law where a 33-43 comes off as something that was retroactively important. [00:23:05] Speaker 03: Why were you talking about 33-43 in connection with the damages instructions? [00:23:10] Speaker 03: Why was I talking about it? [00:23:11] Speaker 03: Yeah, you were pressing for an instruction and you were saying you were citing the 33-43 as the basis for the instruction. [00:23:18] Speaker 00: Yes, Your Honor. [00:23:20] Speaker 00: What I was doing there, that was actually, if I'm remembering the background to support the answer to Your Honor's question correctly, the reason why I was mentioning that was simply to illustrate that the emotional distress damages were available under garden variety fraud, which is what we were doing. [00:23:37] Speaker 00: I think where 33-43 came up was on the issues that are in the cross appeal. [00:23:43] Speaker 00: I think the only reason that 33-43 was mentioned was to support [00:23:48] Speaker 00: the premise that you can indeed have legal remedies and equitable remedies and that it's not an inadequate remedy at law. [00:23:57] Speaker 00: I think that's the only context in which we raised 3343. [00:24:00] Speaker 00: Certainly, I did not argue that. [00:24:02] Speaker 00: I was trial counsel in this case. [00:24:03] Speaker 00: Certainly, I did not argue that to the court. [00:24:05] Speaker 00: I didn't ask for instruction on 3343. [00:24:07] Speaker 00: We never pleaded it. [00:24:09] Speaker 00: It appeared nowhere. [00:24:11] Speaker 00: And the district court, I think, correctly deemed this to be a garden variety fraud case. [00:24:17] Speaker 00: submitted it and I would submit that California law is quite clear that emotional distress damages are available for guard variety fraud cases. [00:24:24] Speaker 02: I was going to say I'm reading I think I have the same question that my colleague does so I'm reading ER 148 through 151 I would say and that is special instruction proposed by plaintiff fraud tort damages and in that instruction [00:24:47] Speaker 02: It looks like you cite 3,343 four times. [00:24:55] Speaker 00: I'm sorry. [00:24:57] Speaker 02: And so that would be claimed for the jury, correct? [00:25:00] Speaker 02: Not for the equitable stuff, for the district court. [00:25:02] Speaker 00: I don't believe so, Your Honor, because at that point, what we were still trying to do didn't have anything to do with emotional distress damages. [00:25:09] Speaker 00: What we were trying to do at that point was we were actually, I was actually, I'll say, and my client were trying to convince the district court [00:25:17] Speaker 00: that benefit of the bargain or expectation damages should be available for promissory estable and unjust enrichment. [00:25:24] Speaker 00: So that's why that was being cited. [00:25:26] Speaker 00: Ultimately, the district court very insistently found that that was not available and that benefit of the bargain damages would not be available except in response to equitable claims. [00:25:38] Speaker 00: And that goes to the exchange that I had with the court. [00:25:43] Speaker 00: It appears on page 41. [00:25:45] Speaker 00: That's an ECF citation of our brief. [00:25:48] Speaker 00: And that was 6ER 1265 13 to 1266 12, line 13 and then line 12 on the subsequent page. [00:25:59] Speaker 00: That's where I asked the court in paraphrase, wait a minute, how are you not effectively, Your Honor, [00:26:07] Speaker 00: to directing it to the district judge. [00:26:09] Speaker 00: How are you not making a directed verdict or motion for summary judgment here on the ownership interest? [00:26:17] Speaker 00: Because you're effectively saying there's no way for Ms. [00:26:20] Speaker 00: Wright to recover on the ownership interest without this. [00:26:23] Speaker 00: And I was trying to get every argument in I could, and that's why I was raising 33-43. [00:26:29] Speaker 00: But it didn't matter the district court was now persuaded the district court told me he didn't want to limit my creativity And then told me that benefit of the bargain damages were not available said if it was a breach of contract case sure And then I pointed out well, but we still have the promissory estoppel claim, which is a contract substitute and [00:26:50] Speaker 00: And then the district court responded, and again, I'm paraphrasing. [00:26:53] Speaker 00: I don't mean to misquote. [00:26:55] Speaker 00: But the district court responded by saying, yeah, and we'll take that up, Mr. Norris, at the appropriate time after the jury verdict on equitable matters. [00:27:04] Speaker 00: So that's why that was being raised. [00:27:06] Speaker 00: But certainly in the context of emotional distress damages, we never requested that. [00:27:10] Speaker 00: And the court didn't adopt it. [00:27:12] Speaker 00: And we didn't have a problem with that. [00:27:14] Speaker 00: And I don't think we raised any objection to it. [00:27:17] Speaker 00: And again, this was a garden variety fraud claim. [00:27:21] Speaker 00: Yes, I was trying during the course of the entire proceeding. [00:27:25] Speaker 00: I was trying to get the jury to hear in a non-advisory role the promissory estoppel claim and the unjust enrichment claim because I thought that bore on legal restitutionary remedies, not equitable remedies. [00:27:39] Speaker 00: You know, failing that, I tried to get the court to instruct the jury on damages. [00:27:45] Speaker 00: I also note one thing, too, and this is not covered in my brief, so forgive me. [00:27:49] Speaker 00: I don't mean to deviate. [00:27:51] Speaker 00: It's definitely covered in the record, however, that the jury actually telling me [00:27:56] Speaker 00: came back with a question. [00:27:58] Speaker 00: I think they came back with three questions. [00:27:59] Speaker 00: The total might have been two. [00:28:01] Speaker 00: But I'm fairly sure the first question they came back with effectively asked the district court to clarify, are we supposed to be calculating the ownership interest here? [00:28:11] Speaker 00: And the district court's response to that was simply to read them the appropriate jury instructions again. [00:28:18] Speaker 00: So effectively, that was a no. [00:28:20] Speaker 00: And of course, because the promissory estoppel and unjust enrichment claims were [00:28:24] Speaker 00: in an advisory basis only, there was no way that they could assign damages to those claims. [00:28:29] Speaker 00: The verdict form imposed by the court did not include damages claims there. [00:28:35] Speaker 00: So that's the answer there as far as emotional distress damages. [00:28:39] Speaker 02: So let me follow up then with your question about closing. [00:28:43] Speaker 02: So in closing, I'm looking at ER 1329 to 1330. [00:28:48] Speaker 02: You said that meeting was about keeping Ms. [00:28:53] Speaker 02: Wright on board. [00:28:54] Speaker 02: doing anything they needed to to make sure that Ms. [00:28:57] Speaker 02: Wright continued to provide services for Old Gringo. [00:29:01] Speaker 02: Yes. [00:29:01] Speaker 02: So when I read that, the argument as I read it was that, look, they were trying to shine on Ms. [00:29:07] Speaker 02: Wright for her to stay with the company. [00:29:11] Speaker 02: And that's why they were promising this 5%, which was a lie. [00:29:16] Speaker 02: And they did that in my word here. [00:29:18] Speaker 02: You didn't use this word, but my word is they did it in exchange for keeping her on board. [00:29:26] Speaker 02: And the jury bought the theory. [00:29:27] Speaker 02: And that's why you look at that jury verdict again and again and again. [00:29:31] Speaker 02: They believe that she was defrauded and she was tricked into doing this. [00:29:36] Speaker 02: That being the case, when you look at the language of 1343 is mail fraud. [00:29:44] Speaker 02: I was a prosecutor for a long time. [00:29:45] Speaker 02: That's why I keep saying that. [00:29:47] Speaker 02: 3343, I look at that language and it says, [00:29:52] Speaker 02: One defrauded in the purchase, sale, or exchange of property. [00:29:59] Speaker 02: Why doesn't this fit into that exchange of property? [00:30:03] Speaker 02: It's an exchange of 5%, which was a lie. [00:30:06] Speaker 02: That was the fraud. [00:30:07] Speaker 02: An exchange for her staying with the company. [00:30:10] Speaker 02: Why doesn't that fit into 3343? [00:30:12] Speaker 00: Well, I think it does, Your Honor, but only in what the district court found to be the equitable context. [00:30:18] Speaker 00: Because the district court effectively took away Ms. [00:30:21] Speaker 00: Wright's ability to recover that property, either the ownership interest, which is what we contended, or the 5% profit share that Mr. Tarrett testified about, which the district court never referred to, as far as I'm aware, in any papers. [00:30:37] Speaker 00: But that was their version of events. [00:30:39] Speaker 00: That was the property that was taken away. [00:30:42] Speaker 00: That was the value of the promise that was never fulfilled. [00:30:45] Speaker 00: And that was the unjust enrichment because that was retained as a benefit. [00:30:50] Speaker 00: And so the district court was very clear that it wasn't going to allow submission [00:30:56] Speaker 00: of those damages to the jury and ultimately did not allow submission of those damages to the jury. [00:31:01] Speaker 00: But I don't believe that 3343 was the proper instruction to the jury to foreclose economic damages. [00:31:11] Speaker 00: I think that the argument that I may have been making [00:31:14] Speaker 00: your honor, was that 33-43, if it is applicable, which the district court found, I think probably correctly that it wasn't, at least if it was going to instruct the jury on the legal damages only as it did, [00:31:27] Speaker 00: pertain to that property interest, pertain to the ownership interest or the 5% profit share. [00:31:34] Speaker 00: And that would constitute a property interest. [00:31:36] Speaker 00: So that's the answer to that question. [00:31:38] Speaker 02: So your answer then is that 3343 applies to certain claims in this case, but not all of them? [00:31:45] Speaker 00: I think the way the district court analyzed the claims, and we don't contest this, it doesn't apply to anything. [00:31:52] Speaker 00: Because we have equitable arguments that don't sound in 3343. [00:31:57] Speaker 00: We were attempting, and I really should say I was attempting, at the trial stage, particularly during the charge conference or the instructions conference. [00:32:07] Speaker 00: You're honored to use the better term, the civil term. [00:32:10] Speaker 00: I was attempting to do anything I could to convince the district court that the district court should allow the jury to consider these damages. [00:32:19] Speaker 00: That's the only place that 33-43 came in. [00:32:22] Speaker 00: The district judge was quite insistent. [00:32:24] Speaker 00: No, we're not going to submit those to the jury. [00:32:26] Speaker 00: There's no benefit of the bargain damages available here. [00:32:29] Speaker 00: There's reliance damages only. [00:32:31] Speaker 00: So 33-43 at that point is out the window. [00:32:33] Speaker 00: And I certainly never made any argument that 33-43 should apply to emotional distress. [00:32:39] Speaker 02: No, I appreciate that you never made the argument. [00:32:41] Speaker 02: I'm trying to assess. [00:32:42] Speaker 02: The other side in this case is arguing no emotional damages at all because 33-43 covers all the claims in this case. [00:32:50] Speaker 02: And I'm trying to understand why they are wrong. [00:32:53] Speaker 02: The spray case seems to definitely help you. [00:32:56] Speaker 02: I get that. [00:32:57] Speaker 02: But I'm trying to understand, just by reading the language of 3343, it says exchange of property. [00:33:02] Speaker 02: This seems to me an exchange of property or fraud relating to it, the property being 5% of the company, which is what damages the jury. [00:33:12] Speaker 02: found initially before the remitter seemed to confirm. [00:33:15] Speaker 02: So I'm just trying to understand why 3343, with that explicit language, doesn't apply to the fraud as it was argued in this case. [00:33:22] Speaker 00: Your Honor, because I don't think the jury was instructed that way. [00:33:25] Speaker 00: And so I don't think there's any way to conclude that the jury did award the amount pre-remitter based on 3343. [00:33:32] Speaker 00: I don't think they ever heard about 3343. [00:33:35] Speaker 02: I guess I'm asking a different question. [00:33:37] Speaker 02: 3343 is a limit on damages. [00:33:39] Speaker 02: Yes. [00:33:40] Speaker 02: So why wouldn't that limit apply in this case? [00:33:43] Speaker 00: because it wasn't asked for by the plaintiff. [00:33:45] Speaker 00: The plaintiff was seeking to recover on the legal side, as limited by the district court, for garden variety fraud. [00:33:52] Speaker 00: And 33-43 does not override garden variety fraud cases. [00:33:56] Speaker 00: If it did, then the only way to recover for fraud in the state of California would be under 33-43, and we submit that is not the law. [00:34:04] Speaker 02: But just so, it's your position that 33, because as I read 33-43, it talks about the exchange of property. [00:34:11] Speaker 02: Your argument is, [00:34:13] Speaker 02: What would it apply to, I guess is what I'm saying. [00:34:16] Speaker 02: Under your reading of 3343, when would it apply? [00:34:19] Speaker 00: Well, under our reading of 3343, it would apply if, frankly, I'm not sure, Your Honor. [00:34:28] Speaker 01: Was there an exchange of property in this case? [00:34:31] Speaker 00: No, because the promise was false. [00:34:33] Speaker 01: I guess that's the point, is that there was no exchange of property. [00:34:39] Speaker 00: Yeah, and I think, Your Honor, thank you, Your Honor. [00:34:43] Speaker 01: I think that's, I don't know, I don't want to put words in your mouth, but I... Yeah, I mean, it's... That's why I'm confused about the whole basis for this case, like how it was tried and [00:34:54] Speaker 01: Seems like the strange thing to me was the separation out of claims and the various arguments that went to the different claims. [00:35:03] Speaker 01: And I don't know why the judge had an advisory jury on the equitable claims. [00:35:07] Speaker 01: I mean, who came up with that one? [00:35:12] Speaker 00: But the judge, certainly we didn't. [00:35:15] Speaker 01: All right. [00:35:16] Speaker 00: And Your Honor, if I can, and I'll certainly go back to Judge Owens' question in a second if I can. [00:35:24] Speaker 00: But, Your Honor, I think that, yeah, I have a lot of problems with the way that the case was tried also. [00:35:30] Speaker 00: I think the biggest problem that I have is that, first of all, the Equity First principle in California seems to have been violated because the court tried the claim simultaneously. [00:35:41] Speaker 00: Now, that's fine. [00:35:42] Speaker 00: But the biggest problem that I have is that the court insistently told me throughout the case, charge conference, pretrial conference, [00:35:52] Speaker 00: there was one theory of damages that would go to the jury and that was detrimental reliance. [00:35:58] Speaker 00: That's it. [00:35:59] Speaker 00: And so what that means is, is that the plaintiff, Ms. [00:36:04] Speaker 00: Wright, had no adequate remedy at law because her remedy was incomplete. [00:36:09] Speaker 00: She couldn't get [00:36:10] Speaker 00: the ownership interest, which our expert valued at originally $1.9 million, updated $2.75 million, or the value of the 5% profit share that they admitted through Mr. Tarrett's testimony existed but was never paid. [00:36:25] Speaker 00: Our expert valued that. [00:36:26] Speaker 00: And by the way, all the expert's testimony was completely unrebutted at $970,000 originally and then $1.6 million by the time of trial. [00:36:35] Speaker 00: So now, basically, you had a lot of damages [00:36:40] Speaker 00: And the district court informed me time and time again that those damages weren't going to go to the jury. [00:36:46] Speaker 00: The only thing that was going to go to the jury was the reliance damages. [00:36:50] Speaker 00: And so the way that I took that, especially after the exchange that I just cited when I was speaking with Judge Owens, again, 6ER 1265 and 1266, the way that I took that was we were going to deal with the fraud claims and the legal claims in front of the jury. [00:37:07] Speaker 00: I don't know why. [00:37:09] Speaker 00: jury was seated in an advisory capacity to consider promissory estoppel and unjust enrichment. [00:37:14] Speaker 00: I also don't know why the district court ignored the advisory verdict. [00:37:19] Speaker 01: Let me ask, if there was an exchange of property, then wouldn't your client have been entitled to her share of that property? [00:37:30] Speaker 00: Yes. [00:37:31] Speaker 01: And did you argue for that? [00:37:34] Speaker 00: Equitably, yes. [00:37:36] Speaker 00: We definitely did. [00:37:37] Speaker 00: We argued for three forms of equitable relief. [00:37:43] Speaker 00: We argued for restitution or unjust enrichment. [00:37:46] Speaker 00: We argued for promissory estoppel. [00:37:48] Speaker 00: And we argued for specific performance. [00:37:50] Speaker 00: And the district court's response in the case of all three was to say, no, she had an adequate remedy at law. [00:37:58] Speaker 00: And really, the only analysis that seemed to be performed was, look, even after remitted her, she still got over $2 million in her legal damages. [00:38:06] Speaker 00: But that's not the analysis. [00:38:07] Speaker 00: It doesn't matter what she got in legal damages from the jury. [00:38:11] Speaker 00: What matters, and I see my time is close to up. [00:38:13] Speaker 00: May I conclude, Your Honor? [00:38:14] Speaker 01: Yes, you may conclude. [00:38:15] Speaker 00: Thank you very much. [00:38:17] Speaker 00: What matters in the analysis is that she had [00:38:20] Speaker 00: two sets of remedies. [00:38:22] Speaker 00: This is a mixed remedy case. [00:38:24] Speaker 00: She had legal remedies on which certain things could be awarded and she had equitable claims on which certain things could be awarded and the district court adopted and ratified that approach and stridently kept to it throughout the entirety. [00:38:37] Speaker 00: What frankly very much surprised me was when we got to the equitable briefing [00:38:42] Speaker 00: And the court simply tossed that aside and said, no, she had an adequate remedy at law. [00:38:46] Speaker 00: She did not. [00:38:47] Speaker 00: She could not recover on the ownership interest. [00:38:51] Speaker 00: She could not recover on the value of the ownership interest. [00:38:53] Speaker 00: And she could not recover on the profit share. [00:38:57] Speaker 01: So what are you seeking in your cross-appeal? [00:39:01] Speaker 00: Well, in the cross-appeal, we are seeking an order from the court because Mr. Vanetti, our expert's testimony, was unrebutted. [00:39:09] Speaker 00: We are seeking an award of the 2.75 million if the court believes the ownership interest or an award of 1.6 million if the court believes the profit share that they admitted and testified to. [00:39:21] Speaker 00: That's the award that we're seeking. [00:39:24] Speaker 00: That can be awarded under either promissory estoppel or unjust enrichment theory. [00:39:29] Speaker 00: It was the result of a false promise that was not carried out. [00:39:33] Speaker 00: and the defendants clearly retained the benefit to which they were not entitled. [00:39:36] Speaker 00: And that's what we're seeking through the equitable claims. [00:39:39] Speaker 00: And then I should very quickly say, Your Honor, that if for some reason the court does not endorse either of those approaches, then our fallback is specific performance. [00:39:48] Speaker 00: The court had no problem with that except, again, that it was an equitable remedy and there was supposedly an adequate remedy at law. [00:39:55] Speaker 00: In order conveying the ownership interest to Ms. [00:39:58] Speaker 00: Wright or if [00:40:01] Speaker 00: Profit share is what's determined to be the most important thing. [00:40:04] Speaker 00: Conveying that profit share and then payments would be due. [00:40:06] Speaker 00: That's what we're asking for in the cross appeal. [00:40:08] Speaker 01: All right. [00:40:09] Speaker 01: Thank you, Council. [00:40:10] Speaker 00: Thank you. [00:40:11] Speaker 00: Thank you, Your Honors. [00:40:25] Speaker 04: Thank you, Your Honors. [00:40:27] Speaker 04: And addressing the issues regarding the [00:40:31] Speaker 04: equitable that's already been addressed in the sonar case which we cited that the district court got it right on that that Those were precluded here because there was an adequate remedy at law which miss right actually pursued and the the argument in the [00:40:49] Speaker 04: briefed by miss right was is that because of the reduction in the award therefore she didn't have an adequate remedy but that's not the point the point is did she have that and did she pursue it in the answer is yes can i ask can i ask you to answer the question that judge owens asked about why or why doesn't thirty three forty three apply in this case the language that's [00:41:14] Speaker 04: I'm going to get to that. [00:41:16] Speaker 04: I was just going to address that here to the left, but I can address it to both sides. [00:41:21] Speaker 04: Justice Owens, you got it right. [00:41:22] Speaker 04: Sprague was found not to be a 33-43 case because there wasn't an exchange of property. [00:41:28] Speaker 04: In this one here, there was a so-called fraudulent exchange at that meeting, which Your Honor brought up Judge Wardlaw earlier regarding that at that meeting. [00:41:40] Speaker 04: That was the essence of what was pled by Ms. [00:41:43] Speaker 04: Wright. [00:41:44] Speaker 04: That's why 3343. [00:41:45] Speaker 04: That's a clearer law here that wasn't applied correctly by the district court, which you can remedy in that regard. [00:41:56] Speaker 04: 3343. [00:41:59] Speaker 04: So what was the exchange then? [00:42:01] Speaker 04: Was for her staying there for giving that 5%. [00:42:06] Speaker 04: And that's [00:42:09] Speaker 04: She said she stayed there for it, but she said she got it immediately. [00:42:14] Speaker 04: That's really important here. [00:42:16] Speaker 04: You keep seeing- Never got it, right? [00:42:18] Speaker 04: No, no. [00:42:18] Speaker 04: She never got it, but- Never got it. [00:42:20] Speaker 01: So how did she get it immediately? [00:42:22] Speaker 04: No, in her mind, she had it immediately, Your Honor. [00:42:25] Speaker 01: Right, but was it matter in her mind if it wasn't actually given to her, if there actually was not an exchange? [00:42:32] Speaker 04: Well, no, that is from her premise that there was an exchange at that point in time. [00:42:37] Speaker 04: That's an exchange of property, a fraudulent exchange of property, which wasn't given, which would make 30... Is her labor property? [00:42:46] Speaker 04: Excuse me? [00:42:47] Speaker 01: Is her labor property? [00:42:50] Speaker 04: Her labor? [00:42:52] Speaker 01: Yes, her staying and continuing to work at Old Gringo. [00:42:56] Speaker 01: Is that property? [00:42:57] Speaker 04: No, she said, Your Honor, she could leave the next day and have the interest. [00:43:04] Speaker 04: She believed she was an owner as of that day. [00:43:07] Speaker 01: Right, but no property was actually exchanged. [00:43:10] Speaker 04: No property was exchanged. [00:43:12] Speaker 04: That's the genesis of her claim. [00:43:14] Speaker 04: But she believed, as of that day, that's when that exchange should have been made, that she was free to leave, not to work there, Your Honor, in that regard. [00:43:26] Speaker 04: I think the last thing, Your Honor, and I'll conclude with this, is the gift. [00:43:30] Speaker 04: You asked some questions there. [00:43:31] Speaker 04: Transfer for value. [00:43:34] Speaker 04: Well, here there was a breach of contract claim. [00:43:37] Speaker 04: There was found to be no consideration in this case. [00:43:40] Speaker 04: When you have no consideration, you have to leave with a gift. [00:43:44] Speaker 04: That's all it can be. [00:43:46] Speaker 04: A transfer of property without consideration is a gift. [00:43:51] Speaker 04: And I believe under 1146-X sequence of the statutory law here, which is in Gordon V. Barr, is indicative in this case for a judgment which should be entered for the defendant. [00:44:10] Speaker 04: Thank you. [00:44:11] Speaker 01: All right. [00:44:11] Speaker 01: Thank you, counsel. [00:44:13] Speaker 01: Wright versus Old Gringo is submitted. [00:44:16] Speaker 01: And this session of the court is adjourned for today. [00:44:42] Speaker 01: This court for this session stands adjourned.