Scalini v. Scalini CA4/3

Filed 11/10/26 Scalini v. Scalini CA4/3 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE FERNANDO SCALINI, Plaintiff and Respondent, G066141 v. (Super. Ct. No. 30-2019- 01109010) JAVIER SCALINI, OPINION Defendant and Appellant. Appeal from a judgment of the Superior Court of Orange County, Gassia Apkarian, Judge. Affirmed. Mark L. Armstrong, for Defendant and Appellant. Papaefthimiou, and Alexander E. Papaefthimiou, for Plaintiff and Respondent. * * * Javier Scalini (Javier) appeals from a judgment following jury verdicts in favor of his brother, respondent Fernando Scalini (Fernando) on claims relating to alleged breaches of fiduciary duty owed to a corporation the brothers jointly owned and operated. As discussed below, Javier raises numerous challenges to the judgment, many of which we find are forfeited on appeal. The remaining claims of error are meritless. Accordingly, we affirm. STATEMENT OF THE CASE I. THE PLEADINGS A. The Complaint Fernando filed the original complaint on October 31, 2019, and the operative complaint, the fourth amended complaint (FAC). on March 9, 2022. The FAC alleged that Fernando formed a web-based supplement retailer called All-Star Health (ASH) in 1998, and Javier joined later. In 2003, the brothers moved ASH into a new corporation, called 6S, Inc. (6S), in which they were each 50 percent shareholders. They later formed two more corporations, ADF and Healthzone, that shared the same general business model. Fernando and Javier were equal partners in 6S, ADF and Healthzone (collectively, the business). The FAC further alleged the professional relationship between the brothers deteriorated, and in 2015, they agreed to sell the business in a single transaction. In May 2016, they retained Deloitte Corporate Finance LLC (Deloitte) to assist with the sale. The FAC alleged that despite agreeing to the sale, Javier would not cooperate in the sale process unless Fernando agreed to unreasonable demands. Additionally, he began neglecting his duties at 6S until February 2017, when he returned to the office a few hours a day on an irregular basis. “By May of 2018, due largely to [Javier’s] neglect, obstruction and mismanagement, the valuation of the [business] had crashed from $70 million to $8-12 million by Deloitte’s estimation.” 2  The FAC alleged that, during this time, on three separate occasions, Fernando attempted to engage a mediator to help resolve the issues between the brothers, but Javier refused. Finally, in January of 2019, Javier agreed to mediation or arbitration with ADR Services. However, he later changed his mind and insisted each side pick a friend to hear the issues. This process did not lead to any resolution. The FAC alleged that after Fernando filed this action, Javier began to improperly use 6S’s funds to pay his attorney fees and costs incurred in connection with his defense. Javier also used 6S funds to pay legal fees in a separate action to dissolve 6S. When Fernando learned of this conduct, he emailed Javier to inform him that 6S’s bylaws and the California Corporations Code did not permit Javier to use company funds to pay for his legal fees. Javier responded by stating Fernando could instruct his attorney to argue the matter in court. The FAC alleged that Javier’s conduct, including his alleged misappropriation of company funds to pay legal fees, constituted a breach of fiduciary duty to 6S. The FAC also sought a judicial determination and declaration of the parties’ respective interest in the business and Javier’s breaches of fiduciary duties. B. The Cross-Complaint On April 27, 2021, Javier filed his First Amended Cross- Complaint (FACC). The FACC alleged that Javier founded ASH and 6S. Fernando later joined 6S, but also continued working for another entity. The FACC alleged that as 6S continued to grow, Fernando began working less and less while Javier averaged 80 to 100 hours each week for the last fifteen years. Javier then approached Fernando with the idea of selling 6S. The company was initially valued at between $60 to $70 million, but that 3 valuation dropped by more than 80 percent after the actual financial numbers, rather than the “inflated numbers initially provided by Fernando,” were considered. The FACC alleged that while the sale process was ongoing, “Javier and Fernando attempted to negotiate several initiatives whereby they would either sell the business to a third party entirely or sell their respective interest to the other. These negotiations culminated in a binding mediation, but Fernando has never performed the terms of that binding outcome.” Fernando also sued Javier, sent harassing and abusive emails to Javier and other 6S employees, strained relationships with vendors, and took substantial funds from 6S for Fernando’s own benefit. The FACC alleged Fernando’s conduct constituted a breach of his fiduciary duty to 6S. It also alleged a cause of action for breach of contract against Fernando based on his failure to comply with a written agreement to “binding mediation of their disputes.” II. FERNANDO’S MOTION IN LIMINE NO. 1 Trial on the complaint and cross-complaint was set for November 28, 2022. On November 17, 2022, Fernando moved to exclude evidence of any mediation pursuant to Evidence Code sections 1115 through 1129. He specifically requested the court exclude “any and all evidence, references to evidence and testimony regarding: (a) any mediation involving Fernando or Javier; (b) anything said or any admission made for the purpose of, in the course of, or pursuant to, such mediation; (c) any writing that is prepared for the purpose of, in the course of, or pursuant to, such mediation; (d) all communications, negotiations, or settlement discussions by and between participants in the course of such mediation; and (e) any report, assessment, 4 evaluation, recommendation, or finding of any kind by the mediators concerning any such mediation.” Javier opposed the motion to exclude evidence of mediation. He contended the motion is equivalent to summary adjudication of his second cause of action for breach of contract. He argued the agreement to mediate is admissible under Evidence Code section 1120. He further argued that the agreement to mediate was equivalent to an arbitration provision, and thus, “the documents surrounding the creation of that agreement and the decision document created by [the mediators] are not inadmissible under any grounds.” Although it is not disputed the trial court granted the motion in limine, the court’s exact ruling is not in the record. The minute order notes the court ruled on the motion in limine to exclude “EVIDENCE RE: MEDIATION AND MEDIATOR’S PROPOSAL.” III. SPECIAL AND GENERAL VERDICTS Following trial, the jury returned special and general verdicts, which are memorialized in a July 8, 2025 Judgment. In its special verdicts, the jury found Javier breached his duty of loyalty by knowingly acting against 6S’s interest in connection with the planned sale of 6S in 2016, but 6S did not suffer any harm. It found Javier did not breach his duty of loyalty by knowingly acting against 6S’s interest on any other potential sale or by using 6S’s funds to pay for his attorney fees in the amount of $85,662.40. It found Javier breached his fiduciary duty to act with reasonable care by failing to act as a reasonably careful corporate officer would have acted in connection with the potential sale of 6S, but 6S was not harmed. The jury found Javier breached his fiduciary duty to act with reasonable care by using company 5 funds to pay his attorney fees in the amount of $85,662.40, and that his wrongful conduct harmed 6S in the amount of $85,662.40. As to Fernando, the jury found he did not breach any fiduciary duty, nor did he act with malice, oppression, or fraud. It also found Fernando did not have knowledge of Javier’s wrongdoing before October 31, 2015, but that Javier had knowledge of Fernando’s alleged wrongdoing before October 31, 2015. In its general verdict, the jury found “in favor of Fernando Scalini and against Javier Scalini,” and awarded 6S, a total of $85,662.40 for “for all breaches of fiduciary duty by Javier Scalini.” IV. JAVIER’S POST-TRIAL MOTIONS Javier moved for a new trial or judgment notwithstanding the verdict (JNOV) on the ground that the jury’s verdict was inconsistent. He argued that because the jury found he was not liable for breaches of fiduciary duties in connection with the potential sale of 6S, he could not be liable for breaches of fiduciary duties based on his expenditure of company funds to defend himself against those claims because Corporations Code section 317, subdivision (d), requires 6S to indemnify Javier on any claim where he prevails. Javier subsequently filed a second motion for a new trial or JNOV, raising two additional grounds for relief. First, he argued the special verdict form improperly listed the amount of company funds Javier alleged used to pay his attorney fees, which precluded the jury from determining the amount of damages. Second, he argued the trial court improperly granted Fernando’s motion to exclude the mediation agreement, which prevented Javier from presenting his breach of contract claim to the jury. 6  On September 10, 2025, the trial court ordered the judgment corrected and attached the entirety of the special and general verdict forms. Particularly relevant to this appeal, the jury’s finding on the statute of limitations was corrected. Initially, the judgment had stated the jury found Javier lacked knowledge of Fernando’s wrongful conduct before October 31, 2015. It was amended to reflect the jury’s finding was the exact opposite, as stated above. On October 14, 2025, Javier’s posttrial motions were denied “by operation of law.” Javier timely appealed. DISCUSSION Javier raises multiple issues on appeal, which can be divided into issues relating to (1) his claims against Fernando and (2) Fernando’s claims against him. As to Javier’s claims against Fernando, he argues the trial court erred in granting Fernando’s motion in limine to exclude the mediation agreement, and that the jury’s verdict in favor of Fernando’s affirmative defense of statute of limitations was not supported by substantial evidence. As to Fernando’s claims against Javier, Javier argues the jury was not properly instructed about the scope of Javier’s corporate duties concerning payment of legal fees. He also argues the special verdict forms were improper because: (1) the amount of legal fees 6S paid on behalf of Javier was included as an undisputed fact; (2) there were six special verdict forms although Fernando only alleged one cause of action in his complaint; (3) the jury’s special verdict findings were legally inconsistent because it also found Javier did not breach any other duties to 6S and the legal fees incurred were used to defend against those breach of duty claims; and (4) the findings were factually inconsistent because the jury found Javier liable but Fernando not 7 liable for the same breach of fiduciary duty (misuse of corporate funds) despite undisputed evidence that Fernando misused corporate funds. We address each issue in order. I. JAVIER’S CLAIMS AGAINST FERNANDO A. Fernando’s Motion In Limine No. 1 Javier contends he was denied his right to present his cause of action for breach of the mediation agreement to the jury because the trial court “erred in excluding the agreement entirely.” Javier’s claim of error is premised on the assumption that Fernando’s motion in limine sought to exclude the mediation agreement itself. As noted above however, the motion in limine never expressly sought to exclude the mediation agreement. Rather, it sought to exclude evidence relating to mediation pursuant to Evidence Code sections 1115 through 1129. As Javier stated in his opposition to the motion in limine, mediation agreements are admissible under Evidence Code section 1120. (See Evid. Code, § 1120, subd. (b) [“This chapter does not limit . . . the following: [¶] (1) The admissibility of an agreement to mediate a dispute”].) Thus, the mediation agreement was not excluded. Javier argues that because the mediation agreement relates to the “mediation,” when the court excluded “EVIDENCE RE: MEDIATION,” it “necessarily” excluded the mediation agreement as well. He provides no evidence or legal authority for this contention. As noted, the trial court’s exact ruling on the motion in limine is not in the record. On appeal, a trial court’s ruling is presumed correct (Denham v. Superior Court (1970) 2 Cal.3d 557, 564), and “[w]e presume the court followed the applicable law.” (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.) Javier has not shown the trial court ignored Evidence Code section 1120 and excluded 8 the mediation agreement. (See In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 822 [“[T]o be successful on appeal, an appellant must be able to affirmatively demonstrate error on the record before the court”].) Accordingly, we reject Javier’s claims of error based on the purported exclusion of the mediation agreement. B. Statute of Limitations Javier challenges the jury instruction and verdict form regarding the statute of limitations. He argues that because there was “undisputed evidence” Fernando used company funds to pay employees for landscaping services at his personal residence after October 31, 2015, “there [was] no evidence to support the jury’s verdict regarding the statute of limitations defense for Fernando Scalini.” He explains that because “[t]hose charges [payments for landscaping services] were documented as occurring within the four years before the litigation was commenced . . . the statute of limitations . . . does not provide Fernando Scalini with a defense.” Javier further argues that it was improper to instruct the jury and provide a special verdict form which “precluded the jury from providing a verdict regarding the charges that occurred after October 31, 2015.” Based upon the quoted language above, Javier is arguing that the jury found Fernando not liable for misuse of company funds that occurred after October 31, 2015, which falls with the limitations period, because the jury was compelled to do so under the relevant jury instruction, which he does not provide. Javier’s argument is subject to appellate forfeiture for several reasons. “In order to demonstrate error, an appellant must supply the reviewing court with some cogent argument supported by legal analysis and citation to the record. Rather than scour the record unguided, we may decide that the appellant has waived a point urged on appeal when it is not 9 supported by accurate citations to the record.” (City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266, 286–287.) Here, Javier does not provide a record citation for the jury instruction that purportedly was the basis for the jury’s finding of liability. Second, Javier’s argument about the sufficiency of the evidence on statute of limitations cites only evidence favorable to his argument. He does not cite evidence that would support the jury’s verdict and then demonstrate why any such evidence is insufficient. (See Slone v. El Centro Regional Medical Center (2024) 106 Cal.App.5th 1160, 1173 [“To meet its burden on appeal to show a finding of fact is not supported by substantial evidence, appellants cannot recite only evidence in their favor, but must “‘set forth in their brief all the material evidence on the point and not merely their own evidence. Unless this is done the error is deemed to be waived”’”].) Thus, it is waived or forfeited. Even if not forfeited, the claim of error is without merit. Based on our independent review of the record, the relevant jury instruction provides: “Fernando Scalini and Javier Scalini each contend that the other’s lawsuit was not filed within the time set by law. To succeed on this defense, Fernando Scalini and/or Javier Scalini must prove that the other’s claimed harm occurred before October 31, 2015 unless the party asserting the defense proves that before October 31, 2015 he did not discover and did not know facts that would have caused a reasonable person to suspect the other party’s wrongful act or omission.” Thus, the instruction states Fernando can only prevail on a statute of limitations defense if: (1) Fernando can prove the damages occurred before October 31, 2015, which means any damages after October 31, 2015 are not subject to a statute of limitations defense, or (2) Javier did not discover or have inquiry notice of the wrongdoing before October 31, 2015, which means the wrongdoing must have occurred on or 10 before that date. The instruction thus does not preclude any finding of liability for wrongdoing that occurred after October 31, 2015, that is, within the limitations period. The jury’s finding that rejected Fernando’s liability was therefore not based on the statute of limitations. (See People v. Sanchez (2001) 26 Cal.4th 834, 852 [“Jurors are presumed able to understand and correlate instructions and are further presumed to have followed the court's instructions”].) II. FERNADO’S CLAIMS AGAINST JAVIER A. Jury Instructions Javier contends the jury was not properly instructed on the scope of his duty of reasonable care, and thus its verdict that he was liable for breach of that duty must be reversed. This argument is subject to forfeiture on several grounds. Javier does not provide a record citation for the relevant jury instruction. He does not explain why the instruction was incorrect. He does not claim he objected to the instruction below. (See Mardirossian & Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 276 [“[F]ailure to object to the instruction results in a forfeiture of the challenge to the instruction on appeal”.]) Finally and most important, he does suggest what the correct instruction should be based on pertinent legal authority and why the jury’s verdict would be contrary to that correct instruction. In sum, this claim of error is forfeited. (See Champir, LLC v. Fairbanks Ranch Assn. (2021) 66 Cal.App.5th 583, 597 [“[T]he reviewing court is not required to develop [appellant’s] arguments or search the record for supporting evidence”].) B. Special Verdict Forms Javier also contends the jury’s verdict is undermined by (1) the fact the amount of legal fees was set forth in questions on the special verdict 11 forms, which “invaded the province of the jury to decide damages,” and (2) there were six special verdict forms, although Fernando only alleged one cause of action for breach of fiduciary duty in his complaint. As to the first claim of error, Javier does not dispute that the amount of legal fees set forth in the questions on the special verdict forms is correct. Additionally, he acknowledges the jury also was presented with the opportunity to write in the amount of damages in the same special verdict form. Thus, the jury was provided the correct information about the amount of company funds Javier used to pay his legal fees, but then was permitted to write in any amount of damages. On this record, there was no invasion into the province of the jury to determine damages. As to the second claim of error, Javier provides no legal authority to support his claim that Fernando could not submit six special verdict forms, which reflect separate theories of liability based on different fiduciary duties and distinct wrongful acts. Moreover, Javier does not explain how he was prejudiced. (See WFG National Title Ins. Co. v. Wells Fargo Bank, N.A. (2020) 51 Cal.App.5th 881, 894 [“To prevail on appeal, an appellant must establish both error and prejudice from that error”].) In sum, Javier has not shown any error resulting from the form of the special verdicts. C. Consistency of the Verdicts Finally, Javier argues the jury’s special verdict findings were legally and factually inconsistent. (See Missakian v. Amusement Industry, Inc. (2021) 69 Cal.App.5th 630, 654 [“Before a judgment on a special verdict may be entered, the ‘jury’s special verdict findings must be internally consistent and logical’”].) He contends the special verdict findings were legally inconsistent because the jury found Javier breached his fiduciary duty by using company funds to pay legal fees when those same legal fees were 12 incurred to defend against claims on which the jury found in Javier’s favor. He further contends the jury’s special verdict findings were factually inconsistent because the jury found Javier liable but Fernando not liable for the same breach of fiduciary duty (misuse of corporate funds) despite what Javier calls undisputed evidence showing Fernando misused corporate funds in the same time period. As to the claim of factual inconsistency, we note that Javier failed to cite evidence supporting the jury’s finding that Fernando was not liable for misuse of company funds and why the evidence was lacking. (See Defend the Bay v. City of Irvine (2004) 119 Cal.App.4th 1261, 1266 [“As with all substantial evidence challenges, an appellant challenging [a finding of fact] must lay out the evidence favorable to the other side and show why it is lacking. Failure to do so is fatal”].) For example, as Fernando argued in his respondent’s brief, evidence was presented at trial that “all of the personal expenditures Javier claimed Fernando ‘misappropriated’ had already been balanced and compensated for.” Moreover, Javier’s claim of error is premised on the evidence being “undisputed” but the jury is free to credit all or some of the evidence. (See People v. Vu (2006) 143 Cal.App.4th 1009, 1029 [“The jury is the ultimate judge of credibility. The jury may find a witness is credible in some respects and not in others; it may believe parts of a witness’s testimony without believing all of it”].) Javier’s legal inconsistency claim is based on Corporations Code section 317, subdivision (d), which provides: “To the extent that an agent of a corporation has been successful on the merits in defense of any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue, or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith.” However, 13 “[i]ndemnification is mandatory only where the actual merits of the defense have been judicially determined.” (Groth Bros. Oldsmobile, Inc. v. Gallagher (2002) 97 Cal.App.4th 60, 73.) Here, assuming without deciding that the legal expenses were incurred only to defend against the same claims of breach of fiduciary duty and the jury found invalid in this case, the merits of those claims have not been judicially determined until this appeal concludes. The jury therefore could not determine that Javier was entitled to indemnification even if it found he was not liable for any other breaches of fiduciary duty. Thus, the jury’s special verdicts cannot be legally inconsistent because it cannot make the determination Javier seeks regarding indemnification under 1 the Corporations Code. In sum, Javier has not shown the special verdicts findings were internally inconsistent or illogical. DISPOSITION The judgment is affirmed. Fernando is entitled to his costs on appeal. DELANEY, ACTING P. J. WE CONCUR: GOODING, J. SCOTT, J. 1 We note there is no indication the jury was asked to determine indemnification. Javier does not make that claim on appeal. 14