NICHOLAS E. TAVAGLIONE, Plaintiff and Respondent, v. MICHAEL C. BILLINGS et al., Defendants and Appellants, 4 Cal. 4th 1150

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 plaintiff 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 removing 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.

Additionally, the jury rendered a special verdict assessing pumtive damages against RNB in the amount of $2.3 million and against Billings in the amount of $130,000.

As a result of the jury’s general verdict and interrogatories, the trial court entered its judgment ordering that plaintiff recover (1) from defendant RNB, $2,254,787 in compensatory damages and $2.3 million in punitive damages, for a total of $4,554,787; (2) from defendant Billings, the sum of $2,254,787 in compensatory damages and $130,000 in punitive damages, for a total of $2,384,787; and (3) from three other named defendants, the sum of $1 each (as prayed). 4. Court of Appeal Opinion On appeal, defendants’ 119-page opening brief raised 17 contentions relating to each of the foregoing 7 causes of action.

Among other contentions, defendants challenged as erroneous or inadequate the jury instructions covering these causes of action, and also disputed the sufficiency of the evidence in support thereof. The Court of Appeal, however, considered and resolved only those issues pertaining to the defamation cause of action, believing application of the “general verdict rule" (discussed below) made it unnecessary to address any other issues.

The Court of Appeal reasoned that its review of the issues was “simplified” by the principle that “ ‘a complaint may plead different theories on which relief is sought with legal propriety. . . . Where an appeal is taken [from a general verdict] ... the reviewing court has the power to disregard particular theories and to affirm the judgment on a theory which is supported by the finding and evidence in order that causes may be disposed of by a single appeal and without further proceedings in the trial court.’. . . (Crogan v.

Metz (1956) 47 Cal.2d 398, 403 [303 P.2d 1029].) In other words, . . . where as here an appeal is taken from a general verdict returned on several counts or theories of recovery, it is presumed that the jury found in favor of the prevailing party on each count or theory of recovery and the judgment must be affirmed so long as any one count or theory of recovery is supported by substantial evidence. (Henderson v.

Harnischfeger Corp. (1974) 12 Cal.3d 663, 673 [117 Cal.Rptr. 1, 527 P.2d 353].)” (Fn. omitted.) The Court of Appeal continued by observing that by reason of the “general verdict rule,” it is unnecessary to determine whether every count or theory of recovery is legally valid and supports the general verdict, but only whether any one such theory is valid and supports that verdict.

As the court stated, “In other words, we must affirm the judgment if we determine there is any theory of recovery which supports the judgment. [Fn. omitted.] This principle pertains even though the measure of damages, and thus the amount of the general damage verdict, might differ under the various theories of recovery pleaded in the complaint. (Crogan v. Metz [(1956)] 47 Cal.2d [398] at 404-405 [303 P.2d 1029]; Gilman v.

Nemetz (1962) 203 Cal.App.2d 81, 94 [21 Cal.Rptr. 317].)” The Court of Appeal explained that it relied on the jury’s responses to interrogatories only insofar as they show “the jury found liability and malice in connection with each theory pursued by plaintiff at trial.” The appellate court acknowledged that the jury’s responses “attributed varying monetary figures to each theory of recovery,” and that “[o]nly the damage amount attributed to the . . . ‘illegal ouster’ [theory] actually equates to the total general verdict damage award.” Yet the court stated that it was not bound by the jury’s allocation of damages for purposes of applying the general verdict rule because “according to the jury instructions, plaintiff was entitled to recover the same amount of damages under any theory alleged and proved at trial.” The Court of Appeal agreed that the responses to interrogatories were useful to test the general verdict as to the issues of liability and malice, but stated that “we are unable to comprehend the function or import of the special interrogatories regarding damages.” In the court’s view, “we are not constrained by the damage special interrogatories in resolving the issues raised in this appeal because those interrogatories are meaningless and therefore irrelevant, [f] . . . [W]e conclude . . . that the general verdicts of liability and damage are supported by plaintiff’s defamation count.

Consequently we need not address each of defendants’ 17 claims of error but instead shall limit our review to those claims which relate directly or indirectly to the ‘cause of action’ for defamation.” 5. Discussion As will appear, we disagree with the Court of Appeal’s analysis. The jury’s responses to the interrogatories clearly disclosed its finding that plaintiff had incurred only $604,787 in compensatory damages from defendants’ defamation. The Court of Appeal’s limited review and rejection of the defamation issues cannot sustain the entire $2.25 million judgment.

The Court of Appeal’s statement that the damage interrogatories were “meaningless and irrelevant” is puzzling. Under

section 625 of the Code of Civil Procedure, the trial court is permitted to direct the jury “to find upon particular questions of fact .... Where a special finding of facts is inconsistent with the general verdict, the former controls the latter, and the court must give judgment accordingly.” (See also Hasson v. Ford Motor Co. (1977) 19 Cal.3d 530, 540-541 [138 Cal.Rptr. 705, 564 P.2d 857] [special verdict or finding primarily used to test validity of general verdict]; Hurlbut v. Sonora Community Hospital (1989) 207 Cal.App.3d 388, 403 [254 Cal.Rptr. 840] [same]; Bond v.

DeWitt (1954) 126 Cal.App.2d 540, 544 [272 P.2d 561] [special interrogatory response finding no fraud by defendants deemed inconsistent with general verdict awarding plaintiff damages, where fraud only viable cause of action].) Nothing in

section 625 or California case law suggests that the

section is inapplicable to special findings regarding damages as were made here. (See Pressler v.

Irvine Drugs, Inc. (1985) 169 Cal.App.3d 1244, 1249 [215 Cal.Rptr. 807] [approving use of special interrogatories to allocate general verdict damages between medical expenses, lost earnings, and general damages].) The “general verdict rule” relied on by the Court of Appeal provides that where several counts are tried, a general verdict will be sustained if any one count is supported by substantial evidence and is unaffected by error, despite possible insufficiency of evidence as to the remaining counts. (See McCloud v.

Roy Riegels Chemicals (1971) 20 Cal.App.3d 928, 935-936 [97 Cal.Rptr. 910].) The rule is based on the assumption “that the jury found on the cause of action or theory which was supported by substantial evidence and as to which there was no error,” an assumption that may be proven incorrect by the special verdict or response to special interrogatories. (Id. at p. 936.) Here, the jury’s responses to the special interrogatories disclosed its determination that plaintiff was damaged in differing amounts by defendants’ tortious activity.

Among other responses, the jury found that plaintiff’s damages resulting from defendants’ defamation amounted to $604,787, those resulting from defendants’ breach of the implied covenant totaled $1,650,800, and plaintiffs “total damages” from being removed from the RNB board were $2,254,787. (Inexplicably, the two lesser damage figures add to $2,255,587.

Perhaps the $1,650,800 figure was intended to be $1,650,000.) As indicated in the jury’s remaining responses, plaintiff was also damaged in the amount of $1,622,000 by defendants’ interference with plaintiff’s contractual relations with others, but this damage seemingly overlapped damages plaintiff suffered through breach of the implied covenant and was probably included in the $2,254,787 total damage figure.

Using the jury’s special finding as to defamation damages to “test” the general verdict, it seems incontrovertible that only a portion (namely, $604,787) of the general verdict of $2,254,787 may be deemed to constitute damages attributable to defendants’ defamation. Plaintiff contends that defendants waived the right to assert any inconsistency between the responses to special interrogatories and the general verdict.

According to plaintiff, defendants agreed to the form of the verdict, declined to request resubmission of any issues to the jury, and failed to raise the supposed inconsistency in their postjudgment motions. We think plaintiff misconceives the precise nature of the inquiry before us.

Our present task is not to reconcile the various responses to the special interrogatories with the general verdict, but to determine whether the Court of Appeal properly affirmed a judgment for $2,254,787 in compensatory damages and $2.3 million in punitive damages by reviewing only those issues pertaining to a $604,787 component of that judgment. Even assuming defendants waived their right to object to the verdict form or to assert inconsistencies in the verdict, the fact remains that the jury specifically found defendants’ defamation of plaintiff amounted to only a fraction of the total damages suffered by him.

Thus, some appellate issues potentially affecting the remainder of these damages have not been reviewed, including substantial issues underlying plaintiffs theory of illegal ouster. (Defendants’ opening brief on appeal appears to contain numerous issues pertinent to causes of action other than the defamation cause.) We conclude that, under such circumstances, reliance on the general verdict rule to limit review of the issues was improper. The Court of Appeal’s reliance on Crogan v. Metz (1956) 47 Cal.2d 398, 404-405 [303 P.2d 1029], and Gilman v.

Nemetz (1962) 203 Cal.App.2d 81, 94 [21 Cal.Rptr. 317], seems misplaced. These cases allow application of the general verdict rule despite variances in the measure and amount of damages under the various theories of recovery. Neither Crogan nor Gilman, however, involved special findings which assigned specific damage amounts to specific theories of recovery. Neither case suggests that the general verdict rule would apply despite such special findings.

As for the Court of Appeal’s statement that under the instructions plaintiff was entitled to recover the same amount of damages under any of plaintiffs various theories, we have reviewed the instructions and none of them would preclude a finding of differing amounts of damage for each theory of recovery. Indeed, as a matter of logic, it would seem unlikely that plaintiffs damages from being defamed by defendants would be identical to the damages he incurred from being ousted from RNB’s board of directors. Unlike the cases cited by plaintiff (e.g., Barrett v.

Superior Court (1990) 222 Cal.App.3d 1176, 1182 [272 Cal.Rptr. 304]), these theories of recovery seem based on different “primary” rights and duties of the parties. Regardless of the nature or number of legal theories advanced by the plaintiff, he is not entitled to more than a single recovery for each distinct item of compensable damage supported by the evidence. (Shell v.

Schmidt (1954) 126 Cal.App.2d 279, 291 [272 P.2d 82].) Double or duplicative recovery for the same items of damage amounts to overcompensation and is therefore prohibited. (Ibid.) Thus, for example, in a case in which the plaintiff’s only item of damage was loss of commissions, two awards of damages identical in amount—one for breach of contract and the other for bad faith denial of the same contract—could not be added together in computing the judgment. Plaintiff was entitled to only one of the awards. (DuBarry Internat., Inc. v.

Southwest Forest Industries, Inc. (1991) 231 Cal.App.3d 552, 563-565 [282 Cal.Rptr. 181]; see also Walker v. Signal Companies, Inc. (1978) 84 Cal.App.3d 982, 995-996 [149 Cal.Rptr. 119] [impermissible double recovery where no separate evidence supported distinct awards of damages in contract and tort].).

In contrast, where separate items of compensable damage are shown by distinct and independent evidence, the plaintiff is entitled to recover the entire amount of his damages, whether that amount is expressed by the jury in a single verdict or multiple verdicts referring to different claims or legal theories. (See Pat Rose Associates v. Coombe (1990) 225 Cal.App.3d 9, 20 [275 Cal.Rptr. 1], disapproved on other grounds in Adams v.

Murakami (1991) 54 Cal.3d 105, 116 [284 Cal.Rptr. 318, 813 P.2d 1348] [recovery of sum of (1) out-of-pocket loss recovered under fraud theory and (2) lost profits damages recovered under contract theory permissible where damage items were distinct and entire amount of injury was compensable under fraud theory in any event].) Because the Court of Appeal herein misapplied the general verdict rule, it did not review the jury’s responses to the special interrogatories (other than those involving the defamation claim) to determine whether: (1) they were free from prejudicial error, (2) they were supported by substantial evidence, and (3) they were based on separate items of compensable damage so as to justify aggregating them in computing the total amount of the judgment.

In order to sustain the judgment against defendants in the stated amount, the Court of Appeal was required to review and uphold a sufficient number of separate damage findings which, when combined, equalled or exceeded the amount of the judgment. This review was not undertaken. In response to the dissent herein, we note that although the Court of Appeal mentioned the procedural concerns cited by the dissent, the court nonetheless elected to reach the merits of the defamation issues raised on appeal.

On remand, the Court of Appeal will be free to dispose of the remaining appellate issues on whatever grounds, procedural or substantive, that court deems appropriate. The judgment of the Court of Appeal is reversed and the cause is remanded to that court for resolution of the remaining appellate issues. Panelli, J., Kennard, J., Arabian, J., Baxter, J., and George, J., concurred.