Tavaglione v. Billings

847 P.2d 574, 4 Cal. 4th 1150, 17 Cal. Rptr. 2d 608, 93 Cal. Daily Op. Serv. 2203, 93 Daily Journal DAR 3890, 1993 Cal. LEXIS 1187
CourtCalifornia Supreme Court
DecidedMarch 25, 1993
DocketS027895
StatusPublished
Cited by91 cases

This text of 847 P.2d 574 (Tavaglione v. Billings) is published on Counsel Stack Legal Research, covering California Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tavaglione v. Billings, 847 P.2d 574, 4 Cal. 4th 1150, 17 Cal. Rptr. 2d 608, 93 Cal. Daily Op. Serv. 2203, 93 Daily Journal DAR 3890, 1993 Cal. LEXIS 1187 (Cal. 1993).

Opinions

Opinion

LUCAS, C. J.

In this case, we consider the interplay between the jury’s responses to special interrogatories, disclosing the amount of damages attributable to plaintiffs various theories of recovery, and the jury’s general verdict, setting forth the total amount of damages awarded to plaintiff. Here, plaintiff sued defendants on several different causes of action, including defamation. The jury’s general verdict awarded plaintiff approximately $2.25 million in compensatory damages, but the jury’s responses to special interrogatories disclosed it found plaintiff’s damages on the defamation count were only $604,787; damages on plaintiffs other theories accounted for the difference. The jury also awarded plaintiff $2.4 million in punitive damages.

On appeal, although defendants raised 17 issues affecting each of plaintiff’s theories of recovery, the Court of Appeal limited its review to the 8 defamation issues, rejected them, and upheld the entire $2.25 million damage award on the theory that “the judgment must be affirmed so long as any one count or theory of recovery is supported by substantial evidence.” Because this analysis fails to properly take into account the jury’s responses to special interrogatories, which limited to $604,787 plaintiff’s damages for defamation, we will reverse the judgment and remand the cause to the Court of Appeal for disposition of the remaining appellate issues.

1. Background Facts

From time to time, defendant Riverside National Bank (RNB) loaned money to plaintiff, the bank’s single largest shareholder and a member of its board of directors. These loans were short-term, interest-only loans, and plaintiff occasionally defaulted on interest payments. In February 1987, RNB’s directors met to discuss plaintiffs defaults and the possibility of removing him from the board. The directors adopted a bylaw disqualifying anyone from serving as a director who stood in default to the bank for more than 30 days. Plaintiff, who allegedly had no notice of this special meeting, did not participate in the bylaw’s adoption. The board subsequently notified plaintiff that, by reason of his current loan default, he was disqualified from continuing to serve as director.

In March 1987, two news articles appeared which quoted RNB’s executive vice-president, defendant Swartz, as saying, among other things, that [1153]*1153plaintiff had been “ousted” from the board because of delinquent loans totalling $714,405.

Following his removal from the board, plaintiff agreed with Bank of Hemet to sell his RNB stock to that bank to obtain money to cure existing defaults and repay the loans from RNB. RNB’s president, defendant Billings, thereafter wrote to RNB shareholders describing plaintiff’s stock sale agreement as “illegal” and “not in the best interests” of RNB.

2. Plaintiff’s Causes of Action

Based on the foregoing facts, plaintiff sued defendants for damages allegedly incurred by their tortious conduct. We briefly describe the seven causes of action set forth in plaintiff’s complaint, as these allegations are relevant to our inquiry whether the Court of Appeal properly confined its review to the issues surrounding the defamation count.

Plaintiffs first cause of action was based on a theory of “illegal ouster”— plaintiff asserted he was denied access to board meetings and thus was ousted as a director of RNB and denied his rights as shareholder. Plaintiff alleged the newly adopted bylaw violated section 303 of the Corporations Code, which generally prohibits removal of a corporate director prior to the expiration of his term. He also alleged the bylaw amounted to an unlawful “ex post facto provision” when applied to previously incurred loan defaults.

Plaintiffs second cause of action was based on defamation arising from defendants’ publication of the information contained in the foregoing news articles and letter to shareholders. Plaintiff alleged damage to his business and reputation, as well as financial losses resulting from being forced to sell his RNB stock at less than fair market value.

Plaintiffs third cause of action was based on “wrongful disclosure of confidential information” and alleged that defendants breached their obligation of confidentiality by conspiring to disclose plaintiff’s loan defaults in order to oust him from the RNB board, damage his credit standing, and force him to sell his RNB stock.

Plaintiffs fourth cause of action was based on defendants’ tortious breach of the implied covenant of good faith and fair dealing, and alleged that defendants conspired to use plaintiff’s loan defaults as an excuse for ousting him from the RNB board, thereby nullifying his right as a shareholder to elect directors, and forcing him to sell his RNB stock.

Plaintiffs fifth cause of action was based on a theory of intentional interference with plaintiffs contractual relationships with RNB as a shareholder and borrower. Plaintiff alleged that defendants’ wrongful acts of [1154]*1154removing Mm from the RNB board and publisMng information regarding Ms loan defaults improperly interfered with those relationsMps.

Plaintiff’s sixth cause of action was based on “interference with contractual relations and prospective advantage,” and alleged that defendant’s acts interfered with plaintiffs relations with financial institutions other than RNB.

Plaintiff’s seventh and final cause of action was based on negligent interference with plaintiff’s relations with financial institutions other than RNB.

As to each of the foregoing causes of action, plaintiff sought compensatory and punitive damages in varying amounts for defendants’ alleged tortious conduct.

3. General Verdict With Special Interrogatories

At the completion of the 30-day trial, the jury returned in plaintiffs favor a “general verdict with special interrogatories.” As will appear, the jury’s responses disclose that the jury found plaintiff had been damaged in various amounts on each cause of action.

Among other questions, the verdict form asked the jury whether either defendant RNB or defendant Billings was liable for removing plaintiff from RNB’s board, and, if so, what was the ‘total amount” of plaintiff’s damages for such removal. All 12 jurors found that both such defendants were liable, and that the total amount of damage was $2,254,787. The form also asked whether either RNB or Billings was liable for defaming plaintiff and, if so, what was the “total amount” of damages as a result thereof. By a vote of 11 to 1, the jury found that both these defendants were liable, and that plaintiff suffered defamation damages in the “total amount” of $604,787.

Other responses found defendants RNB and Billings liable for breaching the implied covenant of good faith, to plaintiffs damage in the “total amount” of $1,650,800; that these defendants and other named defendants were liable for conspiring to intentionally interfere with plaintiff’s contractual relations with RNB, to plaintiff’s damage in the amount of $1,622,000; and that defendants RNB and Billings were liable for interfering with plaintiffs contracts or relations with other lenders, to plaintiff’s total general damage of $2,226,787.

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847 P.2d 574, 4 Cal. 4th 1150, 17 Cal. Rptr. 2d 608, 93 Cal. Daily Op. Serv. 2203, 93 Daily Journal DAR 3890, 1993 Cal. LEXIS 1187, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tavaglione-v-billings-cal-1993.