Opinion by Judge TERRY.
This appeal raises a question of the types of evidence that may be used to prove the value of a stolen car for purposes of establishing the class of theft offense committed. We hold that the Kelley Blue Book may be admitted as proof of value under section 18-4-414(2), C.R.S. 2010, and CRE 803(17), without the need for expert testimony to substantiate the Blue Book's valuation.
Defendant, Chad Thornton, appeals the judgment of conviction entered upon a jury verdict finding him guilty of first degree aggravated motor vehicle theft. We affirm.
I. Background
Defendant's father, who lives in California, contacted the police there to report that defendant was in his home and had possession of a car defendant had stolen from defendant's mother in Colorado Springs. A California Highway Patrol officer investigated the theft. Defendant was charged and, after a jury trial, convicted of theft in El Paso County, Colorado. The trial court sentenced him to ten years in the Department of Corrections.
II. Sufficiency of Evidence
Defendant contends there is insufficient evidence to prove the stolen car's value exceeded $15,000 at the time of the theft. We disagree.
When examining the sufficiency of evidence, we view the evidence presented as a whole and in the light most favorable to the prosecution to determine whether the evidence is sufficient to support a conclusion by a reasonable person that the defendant is guilty beyond a reasonable doubt. Kogan v. People, 756 P.2d 945, 950 (Colo. 1988). The prosecution is entitled to the benefit of every reasonable inference that may fairly be drawn from the evidence, Kogan, 756 P.2d at 950, even if the record also contains evidence to the contrary, People v. Morrow, 682 P.2d 1201 (Colo.App. 1983).
At the time of the offense, first degree aggravated motor vehicle theft was a class 3 felony if the car's value exceeded $15,000. Ch. 288, sec. 1, § 18-4-409(3)(b), 1999 Colo. Sess. Laws 1164 (amended 2007). If the car's value was $15,000 or less, its theft was classified as a class 4 felony. Ch. 288, sec. 1, § 18-4-409(3)(a), 1999 Colo. Sess. Laws 1164 (amended 2007).
Here, the prosecution presented two witnesses to establish that the car's value exceeded $15,000. The California Highway Patrol officer testified that he searched the Kelley Blue Book's website to discern the value of the stolen vehicle and determined that the value was $16,415. The car's owner also testified that she had paid $20,000 for the car two years before it was stolen.
A. Hearsay
Defendant first contends the officer's valuation opinion, which relied on the Kelley Blue Book, was based on inadmissible hearsay, and thus was inadmissible. We discern no basis for reversal.
Because defendant did not raise this issue in the trial court, we review for plain error. See People v. Miller, 113 P.3d 743, 749 (Colo. 2005). "To constitute plain error, the trial court's error must be obvious and substantial and so undermine the fundamental fairness of the trial itself as to cast serious doubt on the reliability of the judgment of conviction." People v. Weinreich, 119 P.3d 1073, 1078 (Colo. 2005).
The Blue Book valuation was admissible under section 18-4-414(2), C.R.S. 2010, which states:
[I]n all cases where theft occurs, evidence of the value of the thing involved may be established through the sale price of other similar property and may include, but shall not be limited to, testimony regarding affixed labels and tags, signs, shelf tags, and notices tending to indicate the price of the thing involved. Hearsay evidence shall not be excluded in determining the value of the thing involved.
The Blue Book indicates the sale price of other similar property, and thus the officer's valuation based thereon was not subject to exclusion as hearsay, even if such an objection had been raised.
The Blue Book valuation was also admissible under the market reports exception to the hearsay rule, CRE 803(17) ("Market quotations, tabulations, lists, directories, or other published compilations, generally used and relied upon by the public or by persons in particular occupations [are not excluded by the hearsay rule]."); see State v. Erickstad, 620 N.W.2d 136, 145 (N.D. 2000) (concluding Blue Book valuation evidence is admissible under rule identical to CRE 803(17)); see also United States v. Johnson, 515 F.2d 730, 732 n. 4 (7th Cir. 1975) (Red Book, published by National Market Reports for more than 64 years, held admissible under market reports and commercial publications exception to hearsay rule); In re Roberts, 210 B.R. 325, 330 (Bankr.N.D.Iowa 1997) (NADA Blue Book fits within market reports exception to hearsay rule); In re Byington, 197 B.R. 130, 138 (Bankr.D.Kan. 1996) ("Market guides are admissible under a specific exception to the hearsay rules."). Because the Blue Book is a market report generally used and relied upon by the public, it falls within the market reports exception to the hearsay rule.
Defendant argues that because the officer did not testify sufficiently to the data he entered into the Blue Book's website, the resulting valuation was incompetent and inadmissible. However, this argument goes only to the weight and not the admissibility of the valuation. See, e.g., Beaudoin v. People, 627 P.2d 739, 741 (Colo. 1981) ("It was for the jury to determine upon proper instructions whether to accept this $300 valuation or a much lesser valuation as indicated from other evidence presented.").
We further reject defendant's contention that the officer needed to be qualified as an expert to provide valuation testimony based on the Blue Book. Because evidence of the Blue Book valuation was admissible, there was no requirement that it be admitted through expert testimony.
Thus, the trial court did not err, let alone plainly err, in admitting the officer's valuation testimony that was based on the Blue Book.
B. Place of Theft
Defendant next asserts that because the officer's testimony did not address the stolen vehicle's value in Colorado, where it was stolen, it was insufficient to prove the car's value. Because defendant did not object to the testimony on this basis in the trial court, we review for plain error and conclude that any error was not plain. See Miller, 113 P.3d at 749.
The record is silent as to whether the officer entered the location of the theft in the database to arrive at a Blue Book valuation. However, any error in failing to exclude testimony that did not address the vehicle's value in Colorado was not obvious. See Weinreich, 119 P.3d at 1078 ("To constitute plain error, the trial court's error must be obvious and substantial. . . ."). The testimony indicated that the officer entered all data about the vehicle that was necessary to arrive at a valuation. No evidence was offered to show that the officer entered incorrect information. Under these circumstances, no plain error requiring reversal has been demonstrated.
C. Sufficiency of the Officer's Valuation Testimony
The officer's testimony established that the value of the stolen vehicle was $16,415 at the time of the theft. This evidence was sufficient to support a conclusion by a reasonable person that defendant was guilty beyond a reasonable doubt of theft of a vehicle with a value exceeding $15,000 under the applicable version of section 18-4-409(3)(b).
Because of our determination of this issue, we need not address defendant's argument that the car owner's testimony was insufficient to prove the car's value at the time of the theft.
III. Request for Substitute Trial Counsel
We disagree with defendant's contention that the district court erred in denying his request for substitution of trial counsel.
We review a district court's decision to deny an indigent defendant's request for substitution of counsel for an abuse of discretion. See, e.g., People v. Gonyea, 195 P.3d 1171, 1172 (Colo.App. 2008). A defendant is only entitled to new counsel when he or she demonstrates "good cause to require substitute counsel." People v. Kelling, 151 P.3d 650, 653 (Colo.App. 2006). Good cause consists of a conflict of interest, a complete breakdown of communication, or an irreconcilable conflict that would lead to an apparently unjust verdict. People v. Arguello, 772 P.2d 87, 94 (Colo. 1989) (citing McKee v. Harris, 649 F.2d 927, 931 (2d Cir. 1981)).
Defendant argues that good cause for substitution was shown because there was a breakdown of communication with counsel. Defendant's trial counsel acknowledged that "there have been a lot of communication breakdowns," but maintained that he was continuing to represent defendant's interests and "had a number of visits with" defendant. The record does not indicate a complete breakdown in communication and supports the district court's determination to deny substitution.
IV. Juror Question and Mistrial
Defendant next contends the trial court erred in asking a juror question and in failing sua sponte to order a mistrial. We are not persuaded.
The trial court asked the following question that had been posed by a juror: "[D]id [the victim — defendant's mother] indicate to you where the stolen vehicle might be located?" The witness responded, "I don't believe she did. She said her son was pretty much homeless and didn't have a location for him." Although, contrary to the court's pre-trial order prohibiting such evidence, the answer mentioned defendant's homelessness, defense counsel rejected the court's offer of a cautionary instruction and stated that the answer did not provide grounds for a mistrial. Nevertheless, defendant now contends that the trial court erred in asking the question and that it should have sua sponte declared a mistrial after the answer was given.
Because defendant did not make a contemporaneous objection to the question or request a mistrial, we review for plain error. People v. Madison, 176 P.3d 793, 805 (Colo.App. 2007). "A mistrial is a drastic remedy and is warranted only if the prejudice to the accused is too great to be remedied by other means." People v. Rosa, 928 P.2d 1365, 1372 (Colo.App. 1996).
The mention of defendant's homelessness, although it violated the pretrial order, was not obvious and substantial error that undermined the fundamental fairness of the trial, and was not unduly prejudicial to defendant. See Weinreich, 119 P.3d at 1078. Therefore, the trial court did not err in not sua sponte declaring a mistrial.
V. Jury Instruction
Finally, defendant asserts that the trial court erred by failing to give a supplemental jury instruction defining the term "value." We disagree.
During deliberations, the jury submitted the following question: "Is it our job to question the value of the vehicle based on the California price vs. the Colorado price? Would that raise reasonable doubt because it's in a different state?" The court responded by stating, "the burden is upon the prosecution to prove to the satisfaction of the jury beyond a reasonable doubt the value of the motor vehicle[.] I cannot provide you any further guidance."
"Whether to provide the jury with additional written instructions in response to a question is a determination within the trial court's sound discretion." People v. Bass, 155 P.3d 547, 552 (Colo.App. 2006). Absent evidence to the contrary, a jury is presumed to understand and follow the court's instructions, and the presumption may be overcome where the jury indicates a fundamental misunderstanding of an instruction. See Leonardo v. People, 728 P.2d 1252, 1255 (Colo. 1986).
When an additional instruction is needed to answer a proper jury question, it should be provided unless
(1) the jurors can be adequately informed by directing their attention to some portion of the original instructions; (2) the request concerns matters not in evidence or does not pertain to the law of the case; or (3) the request would call upon the judge to express an opinion upon factual matters that the jury should determine.
Copeland v. People, 2 P.3d 1283, 1288 (Colo. 2000). Commentary to the relevant American Bar Association Standard for Criminal Justice notes the "sensitive" nature of providing additional instructions because they "may have the effect, intended or not, of coercing a juror into abandoning his or her original position." ABA Standards for Criminal Justice 15-5.3 cmt. (3d ed. 1996).
Here, the trial court correctly responded by referring the jury to the instruction on the prosecution's burden of proof because that portion of the original instructions adequately informed it of the applicable law. The jury's question did not reflect a fundamental misunderstanding of the term "value" that would require definition of this commonly understood term. Thus, the trial court did not err in instructing the jury.
Judgment affirmed.
Judge GRAHAM and Judge ROMAN concur.
asked for a release and "chose not to fully participate in the settlement conference," and further that the settlement benefits the corporations in which Moore has a 50 percent share. Counsel for Culver stated that Moore's counsel "never contacted me regarding any release of any claims against Ms. Moore. I've never heard a word about that, never any request, never any contact, never any attempt to settle individually with Mr. Culver."
At the conclusion of the hearing the trial court ruled as follows: "I still think that my tentative ruling[] is correct for a number of reasons. The key issue . . . with me is: Does the settlement benefit the corporation, which . . . it's clear it does. It gives up about 75 percent of the claims [against the corporations] which benefits the corporations. Ms. Moore's personal claims still survive this lawsuit, because there are some; and by benefiting the corporation, in some sense it also benefits Ms. Moore, even though she might disagree. As indicated, Moore can negotiate her own claims with the creditors. It sounds like they're willing to release her. I think this is a fair settlement, [¶] I think the derivative suit, which is essentially a suit which really has no merit because it is based on usury, shouldn't survive. I think this whole settlement is fair." (Italics added.)
The trial court's tentative ruling stated: "The court finds that the settlement is in good faith and benefits the corporation and its creditors."
On May 31, 2007, the trial court entered an order, consistent with its oral ruling, stating that "the settlement is in good faith and benefits the corporation and its creditors." The order also dismissed with prejudice "all derivative claims asserted by plaintiff on behalf of Alliance Financial Capital, Inc., Alliance Financial Capital Holdings, Inc., Alliance Business Capital, and Industry Funding Corporation" against all defendants subject to those derivative claims.
After entry of the order, counsel for respondents Hill and Pean wrote to the trial court stating that the initial order transmitted to the court for signature "neglected to list the dismissal of derivative claims against Mr. Hatfield" contained in a cross-complaint for indemnity filed by Moore. Counsel asked the court to enter an amended order provided by counsel to "rectify our omission," and informed the court that all other interested parties had been notified of the request.
On June 15, 2007, the trial court entered an amended order on motion for determination of good faith settlement as requested by counsel for Hill and Pean. Pertinent here, the amended order included the following additional ruling: "The derivative claims asserted by plaintiff on behalf of Alliance Financial Capital, Inc., Alliance Financial Capital Holdings, Inc., Alliance Business Capital, and Industry Funding Corporation against Richard Lee Hatfield in the Second, Third and Fourth Causes of Action of the First Amended Cross-Complaint of Jennifer M. Moore for Indemnity, Etc., are hereby dismissed with prejudice." Notice of the amended order was served on all parties by overnight mail on June 19, 2007.
Moore filed in this court on July 16, 2007, a petition for writ of mandate challenging the trial court's good faith settlement order. This court summarily denied Moore's petition for writ of mandate on July 19, 2007 ( Moore v. Superior Court (A118401)). Thereafter, Moore filed the following notice of appeal on July 25, 2007: "Notice is hereby given that defendant Jennifer M. Moore appeals to the Court of Appeal for the First Appellate District from the order of dismissal entered in this action on 31 May 2007, the amendment to that order filed on 15 June 2007 . . . and all orders and rulings, express and implied, intermediate to each of such orders." The July 25, 2007 notice of appeal relates to this court's appeal No. Al 18678.
On September 25, 2007, this court granted respondents' unopposed request in case No. A117526 to take judicial notice of the court's order denying Moore's petition for writ of mandate.
On April 28, 2008, appellant filed a notice in this court that respondent AFC had filed a bankruptcy petition in federal court. Consequently, on May 12, 2008, this court issued an order staying proceedings during the pendency of bankruptcy proceedings. On March 8, 2010, this court vacated its stay order after the federal bankruptcy court lifted the bankruptcy stay affecting these consolidated proceedings.
DISCUSSION
A. Motion for Judgment on the Pleadings in No. A117526
1. Applicable Legal Standards
"On appeal from a motion granting judgment on the pleadings, we accept as true the facts alleged in the complaint and review the legal issues de novo. [Citation.]" ( Noble v. Draper (2008) 160 Cal.App.4th 1, 10 [ 73 Cal.Rptr.3d 3].) In reviewing the trial court's ruling to dismiss Moore's first and second causes of action on the grounds that AFC is exempt from the usury provision in the California Constitution, we apply de novo review since the matter presents a question of law. ( Redevelopment Agency v. County of Los Angeles (1999) 75 Cal.App.4th 68, 74 [ 89 Cal.Rptr.2d 10] [proper interpretation of statutory and constitutional language presents questions of law subject to de novo review].)
Moore requests that we deem the order sustaining respondent Jackson's demurrer to incorporate a judgment of dismissal and consider it along with the appeal of the judgments entered in favor of Hill, Pean and Randolph. We note that "[a]n order sustaining a demurrer is usually not immediately appealable, because it is not on its face a final judgment. [Citation.] However, it may be treated as a judgment for purposes of appeal when, like a formal judgment, it disposes of the action and precludes further proceedings. [Citation.]" ( Thaler v. Household Finance Corp. (2000) 80 Cal.App.4th 1093, 1098 [ 95 Cal.Rptr.2d 779].) Accordingly, we grant Moore's request to treat the trial court's order sustaining Jackson's demurrer without leave to amend as a judgment because it disposes of all claims between Jackson and Moore.
(1) Our review is guided by familiar canons of statutory construction. "Our first step is to scrutinize the actual words of the statute, giving them a plain and commonsense meaning. [Citations.]" ( People v. Valladoli (1996) 13 Cal.4th 590, 597 [ 54 Cal.Rptr.2d 695, 918 P.2d 999].) Further, in scrutinizing the words of the statute, we strive to "give effect and significance to every word and phrase." ( Garcia v. McCutchen (1997) 16 Cal.4th 469, 476 [ 66 Cal.Rptr.2d 319, 940 P.2d 906].) "[W]e consider the statute read as a whole, harmonizing the various elements by considering each clause and section in the context of the overall statutory framework. [Citations.]" ( People v. Jenkins (1995) 10 Cal.4th 234, 246 [ 40 Cal.Rptr.2d 903, 893 P.2d 1224].) In this task, we are mindful that the "`"policy has long been to favor the construction that leads to the more reasonable result. [Citation.]" [Citation.] This policy derives largely from the presumption that the Legislature intends reasonable results consistent with its apparent purpose. [Citation.]'" ( Commission on Peace Officer Standards Training v. Superior Court (2007) 42 Cal.4th 278, 290 [ 64 Cal.Rptr.3d 661, 165 P.3d 462].) Accordingly, we must "`select the construction that comports most closely with the Legislature's apparent intent, with a view to promoting rather than defeating the statutes' general purpose. . . . [Citations.]' [Citation.]" ( Ibid.)
2. Analysis (2) As set forth in section 1 of article XV, the usury restrictions on rates of interest apply to the " loan or forbearance of any money, goods, or things in action. . . ." (Cal. Const., art. XV, § 1, subds. (1) (2), italics added.) The exemptions to the usury restrictions are specifically set forth in article XV's exemption clause, which states in relevant part: "However, none of the above restrictions shall apply to any obligations of, loans made by, or forbearances of any building and loan association . . ., or to any . . . industrial loan companies . . ., or any credit union[] . . . or any duly licensed pawnbroker or personal property broker, or any loans made or arranged by any person licensed as a real estate broker . . ., or any bank . . ., or any other class of persons authorized by statute. . . ." (Cal. Const., art. 15, § 1, italics added [exemptions].)
Moore acknowledges that AFC is a member of a " class of persons authorized by statute" as exempt from the usury law, namely licensed financial lenders as provided under section 22002 of the Finance Code. Moore asserts, however, that as a licensed financial lender, only AFC's "loans and forbearances" are exempt from the usury restrictions, not its "obligations" to the noteholders. Under Moore's reading of the statute, the phrase " any obligations of, loans made by, or forbearances of relates solely to "any building and loan association," not to the other enumerated classes listed thereafter. We disagree.
Section 22002 of the Finance Code states: "To accomplish its underlying purposes and policies, this division creates a class of exempt persons pursuant to Section 1 of Article XV of the California Constitution. [¶] It is the intent of the Legislature to preserve existing exemptions under Section 1 of Article XV of the Constitution and statutory law for (a) personal property brokers formerly regulated by the Personal Property Brokers Law; (b) lenders formerly regulated by the Consumer Finance Lenders Law; and (c) lenders formerly regulated by the Commercial Finance Lenders Law; and no finding that any provision of this division is invalid with respect to a particular lender or class of lenders shall affect the enforceability of this division with respect to any of the foregoing classifications of lenders, which shall in all events continue to be exempted by this division."
(3) First, the punctuation and grammatical structure of the statute demonstrates that the Legislature did not intend to limit the term "obligations" solely to building and loan associations, as asserted by Moore: Rather, it indicates a legislative intent to apply the term "obligations" to all exempt classes. ( White v. County of Sacramento (1982) 31 Cal.3d 676, 680 [ 183 Cal.Rptr. 520, 646 P.2d 191] ( White) [court may consider punctuation to aid in statutory interpretation].) In this regard, we note that the exemptions clause comprises a grant of exemption, followed by a list of the classes to which the grant of exemption shall apply, and that the list of exempt classes is punctuated throughout with the word "or." (4) The use of the word "or" in a statute "indicates an intention to use it disjunctively so as to designate alternative or separate categories. [Citations.]" ( White, supra, 31 Cal.3d at p. 680.) In other words, the Legislature has provided that separately enumerated classes of persons are subject to the preceding grant of exemption, which states: "[N]one of the above restrictions shall apply to any obligations of, loans made by, or forbearances of, . . . ." (Cal. Const., art. XV, § 1.) The comma following "forbearances of means that "obligations, loans and forbearances" are included within the scope of the exemption granted: The same comma also sets off the exemption clause from the exempt classes listed thereafter. On the other hand, to read the grant of exemption which begins with "[N]one of the above restrictions" in the manner asserted by Moore, there must be evidence that the Legislature intended to limit the term "obligations" solely to the exemption granted to building and loan associations. Neither the language of the exemption for building and loan associations nor the manner in which it is punctuated supports Moore's reading of the statute. Moreover, although Moore's interpretation has the effect of limiting the phrase "obligations of, loans made by, or forbearances of to building and loan associations only, she offers no rationale why the Legislature would treat building and loan associations differently from other exempt classes of financial entities, such as banks and credit unions.
(5) Moore suggests that our interpretation impermissibly broadens the statutory exemption to cover obligations as well as loans or forbearances. To the contrary, our interpretation is faithful to the canon that we must "interpret a statute consistently with the meaning derived from its grammatical structure." ( People v. Youngblood (2001) 91 Cal.App.4th 66, 71-72 [ 109 Cal.Rptr.2d 776].) By contrast, Moore's interpretation does violence to this principle by requiring that we split the grant of exemption by inserting a punctuation mark after the phrase "[N]one of the above restrictions shall apply to" and then ignore the comma after the phrase "obligations of, loans made by, or forbearances of."
(6) Moore further argues that an interpretation which includes "obligations" within the exemption clause would render the real estate exemption unintelligible. Moore illustrates this alleged defect in our interpretation by juxtaposition of the applicable statutory language, as follows: "[N]one of the above restrictions shall apply to any obligations of, loans made by, or forbearances of . . . any loans made . . . by a person licensed as a real estate broker." Whereas we acknowledge the dissonance in the statutory language under the juxtaposition posited by Moore, we reject Moore's contention that it renders the real estate exemption unintelligible. Rather, we harmonize our interpretation of the statutory language and the real estate exemption as follows: The phrase "any obligations of, loans made by, or forbearances" does not apply solely to building and loan associations, but to all exempt classes that follow it. The real estate exemption, however, does not define an exempt class — it is a transaction-specific exemption applicable only to "any loans" made by a real estate broker. Thus, the language of the real estate exemption further supports our interpretation because it shows that the Legislature, by choosing not to limit the class-based exemptions only to "loans," knew how to carve out a narrower, transaction-based exemption when it wished to do so. (See City of Ontario v. Superior Court (1993) 12 Cal.App.4th 894, 902 [ 16 Cal.Rptr.2d 32] [courts must assume that the Legislature knows how to create an exception if it wishes to do so].) (7) Finally, and importantly, our statutory interpretation accords with the spirit and purpose of the usury law: Moore's interpretation, however, would stand the usury law on its head. The purpose of the usury law is "`to protect the necessitous, impecunious borrower who is unable to acquire credit from the usual sources and is forced by his economic circumstances to resort to excessively costly funds to meet his financial needs.' [Citation.]" ( Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 804-805 [ 35 Cal.Rptr.2d 418, 883 P.2d 960]; see also O'Connor v. Televideo System, Inc. (1990) 218 Cal.App.3d 709, 718 [ 267 Cal.Rptr. 237] ["usury laws were enacted primarily to `protect the indigent, who are helpless to protect themselves in a practical sense'"], quoting Wooten v. Coerber (1963) 213 Cal.App.2d 142, 148 [ 28 Cal.Rptr. 635].)
In enacting statutory exemptions to article XV of the California Constitution, the Legislature has granted exemptions to (1) classes of persons or entities; and (2) types of transactions. For example, in addition to commercial finance lenders, the Legislature has exempted other classes of persons or entities such as incorporated insurers, state and local public retirement systems, and out-of-state public retirement or pension systems. (13A Cal.Jur.3d (2004) Consumer and Borrower Protection Laws, § 635.) Other exemptions enacted are transaction based, such as "collegiate-grade educational institutions making loans or forbearances to their faculty or staff, when secured by residential dwellings." ( Id. at p. 850.)
The fact that the Legislature distinguished between class-based exemptions and exemptions limited to specific transactions conducted by certain persons or entities, shows that where it exempted a class the Legislature intended to enact a broad, unqualified exemption to members of that class under the usury laws, because it did not limit the exemption to a specific type or category of applicable transaction. Under such a broad, unqualified class-based exemption, all the transactions of class members, whether loans or obligations, are exempt from the usury laws. There is one caveat: "The exempted classes of persons . . . belong to those classes, and qualify for an exemption, by virtue of their licenses," and therefore must act within the scope of that license in order to enjoy the benefit of exemption. ( Agapitov v. Lerner (2003) 108 Cal.App.4th 830, 837-838 [ 133 Cal.Rptr.2d 837] [pawnbroker who makes "nonpawn loans made outside the scope of the pawnbroker license" cannot claim such a loan is exempt from the usury laws].) There is no allegation here that AFC acted outside the scope of its license as a financial lender.
Here, AFC was neither a "necessitous, impecunious borrower" nor a helpless indigent. Rather, AFC was a licensed finance lender specializing in accounts-receivable lending. AFC raised capital by borrowing funds from Lenders secured by promissory notes at rates of interest set by AFC and used that capital to advance loans to companies against eligible accounts receivable under terms defined in a loan document. It makes little sense to us that the Legislature would exempt AFC's accounts-receivable loans to companies from the usury laws, yet at the same time intend that AFC be able to sue its innocent investors under the usury laws for loans they made to AFC at interest rates determined by AFC. Such an outcome would foster injustice because it would permit AFC to unfairly use the usury laws as a sword as well as a shield. ( Wooton v. Coerber, supra, 213 Cal.App.2d at p. 150 [" The usury law is to be used as a shield and not as a sword . . . [and] is intended to prevent the charge of an excessive rate of interest, and may not be used as an engine to perpetrate an injustice.'" (citation omitted)].)
(8) Moore's interpretation of California Constitution, article XV's exemption clause is at odds with the canons of statutory construction which guide our analysis and would lead to an unreasonable result that conflicts with the purpose of the usury law. Thus, we decline to adopt it. ( Commission on Peace Officer Standards Training v. Superior Court, supra, 42 Cal.4th at p. 290 [courts should "select the construction that comports most closely with the Legislature's apparent intent, with a view to promoting rather than defeating the statutes' general purpose"].) The interpretation of the statute we adopt, on the other hand, gives "effect and significance to every word and phrase" ( Garcia v. McCutchen, supra, 16 Cal.4th at p. 476), respects its grammatical structure ( People v. Youngblood, supra, 91 Cal.App.4th at pp. 71-72), and harmonizes its various elements ( People v. Jenkins, supra, 10 Cal.4th at p. 246) in a manner consistent with the purpose of the statute ( Commission on Peace Officer Standards Training v. Superior Court, supra, 42 Cal.4th at p. 290). We conclude that the classwide exemption accorded to licensed finance lenders exempts from the usury law AFC's obligations as well as its loans. Accordingly, we affirm the trial court's grant of judgment on the pleadings in favor of respondents Hill and Pean dismissing Moore's derivative claims based on the usury law.
In the other issue raised by Moore in case No. Al 17526, she contends that the trial court erred by ruling that she had standing to sue derivatively only on behalf of AFC, but not on behalf of AFCH or IFC. Moore asserts that because she alleged AFCH and IFC were the alter egos of AFC and that AFC had paid the interest payments on the Notes issued by AFCH and IFC, she was entitled to "derivatively assert the rights of AFC to the usury defense on the notes of AFCH and IFC."
Moore did indeed allege in her complaint that AFCH and IFC were merely alter egos of AFC, and she is bound by those allegations. ( Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th 728, 791 [ 69 Cal.Rptr.3d 365] [plaintiff "bound by the allegations in [her] verified complaint"].) Accordingly, the issue of Moore's standing to "derivatively assert the rights of AFC to the usury defense on the notes of AFCH and IFC" is moot in light of our foregoing conclusion that AFC's obligations are exempt from the usury law. (See Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538 [ 99 Cal.Rptr.2d 824].)
B. Motion to Confirm Good Faith Settlement in A118678 Moore appeals from the trial court's Amended Order on Motion for Determination of Good Faith Settlement. Moore contends the trial court erred by concluding that the settlement agreement between the Hatfield corporations and Lenders was entered in good faith, pursuant to section 877.6.
See footnote, ante, page 1267.
Respondents assert that the trial court's good-faith determination is not subject to further review on this appeal because Moore's petition for writ of mandate challenging the ruling was denied. We disagree. The trial court's good faith settlement determination is subject to appellate review on appeal from the judgment where writ review was timely sought and summarily denied. (See Wilshire Ins. Co. v. Tuff Boy Holding, Inc. (2001) 86 Cal.App.4th 627, 637; Maryland Casualty Co. v. Andreini Co. (2000) 81 Cal.App.4th 1413, 1426.) Here, writ review was summarily denied and the settlement agreement itself dismissed all derivative claims, effectively rendering judgment in favor of all other defendants who, like Hill and Pean, were subject only to derivative claims asserted by Moore on behalf of the corporations.
Moore also challenges the settlement agreement on the grounds that Hatfield had no authority to dismiss her derivative claims against the Lenders. This contention is moot in light or our determination that the derivative claims asserted by Moore under article XV are not cognizable at law. Additionally, Moore challenges the settlement agreement on the grounds that Hatfield's counsel should not have been allowed to represent the corporations. This claim is not cognizable on appeal. The trial court's order confirming the settlement agreement did not rule on any issue involving conflict of counsel. Furthermore, whereas an order denying a motion to disqualify opposing counsel is an appealable order (See Derivi Construction Architecture, Inc. v. Wong (2004) 118 Cal.App.4th 1268, 1272 [citing Meehan v. Hopps (1955) 45 Cal.2d 213]), Moore never filed a motion to disqualify counsel — she merely lodged an objection on that ground. However, notwithstanding the fact that this claim is not cognizable on appeal, we note that Moore's claim is moot with respect to counsel's joint representation of Hatfield and the corporations in relation to the derivative claims based on the usury law. On the other hand, our reversal of the trial court's summary dismissal of Moore's derivative claims against Hatfield (see post), means that Moore may, upon remand, file a motion to disqualify Hatfield's counsel from representing the corporations on those claims.
The trial court is given broad discretion in deciding whether a settlement is in "good faith" for purposes of section 877.6, and its decision may be reversed only upon a showing of abuse of such discretion. ( Tech-Bilt, Inc. v. Woodward-Clyde Associates (1985) 38 Cal.3d 488, 502 ( Tech-Bilt).) "The trial court's discretion, however, in ruling on a motion under section 877.6 is not unlimited and should be exercised in view of the equitable goals of the statute, in conformity with the spirit of the law and in a manner that serves the interests of justice. (Citation.)" ( Long Beach Memorial Medical Center v. Superior Court (2009) 172 Cal.App.4th 865, 873 ( Long Beach).) In other words, where the exercise of discretion on the basis of established criteria may yield but one conclusion, an abuse of discretion may be found and the appellate court may determine that a particular settlement lacks good faith within the meaning of the statute. (Citation.)" ( TSI Seismic Tenant Space, Inc. v. Superior Court (2007) 149 Cal.App.4th 159, 165.) Moreover, "[t]he party asserting lack of good faith bears the burden of proof (§ 877.6, subd. (d).) That party must show that the settlement is so far `"`out of the ballpark'"' as to be inconsistent with the equitable goals of section 877.6." ( Long Beach, supra, 172 Cal.App.4th at p. 873 [quoting Tech-Bilt, supra, 38 Cal.3d at pp. 499-500].)
Section 877.6 provides in pertinent part: "Any party to an action in which it is alleged that two or more parties are joint tortfeasors or co-obligors on a contract debt shall be entitled to a hearing on the issue of the good faith of a settlement entered into by the plaintiff . . . and one or more alleged tortfeasors or co-obligors. . . . [¶] . . . [¶] A determination by the court that the settlement was made in good faith shall bar any other joint tortfeasor or co-obligor from any further claims against the settling tortfeasor or co-obligor for equitable comparative contribution, or partial or comparative indemnity, based on comparative negligence or comparative fault." (§ 877.6, subd. (a)(1) (c).)
In Tech-Bilt, supra, the California Supreme Court identified the following nonexclusive factors courts are to consider in determining if a settlement is in good faith under section 877.6: "a rough approximation of plaintiffs' total recovery and the settlor's proportionate liability, the amount paid in settlement, the allocation of settlement proceeds among plaintiffs, and a recognition that a settlor should pay less in settlement than he would if he were found liable after a trial. Other relevant considerations include the financial conditions and insurance policy limits of settling defendants, as well as the existence of collusion, fraud, or tortious conduct aimed to injure the interests of nonsettling defendants." ( Tech-Bilt, supra, 38 Cal.3d at p. 499.)
The settlement agreement before us fairly apportions the available proceeds between the noteholders such that all noteholders receive approximately the same percentage on the dollar amount owed to them by the corporations, and all noteholders are released from the derivative claims asserted on behalf of the corporations by Moore. Also, the settlor corporations pay less in settlement, approximately 22 cents on the dollar, than they would if found liable on the notes after trial.
On the other hand, the settlement agreement is patently unfair to Moore on the apportionment of liability between Moore and Hatfield. Under the terms of the settlement agreement, Hatfield, like the corporate entities, is released from all liability to the noteholders upon payment of the settlement proceeds. In other words, Hatfield's personal liability is extinguished not only with respect to the Culver cross-complaint, but also with respect to all the other corporate debt he assumed by personally guaranteeing the promissory notes issued to all Lenders. Regarding Moore, however, the settlement agreement specifically provides that she is "not released from any claims which are being released herein among the Settling Parties or by any Settling Party." Moore, therefore, remains personally liable on claims of over $1 million asserted in the Culver cross-complaint, as well as any other claims, as yet undetermined, which Lenders may be able to assert against her. Furthermore, despite the trial court's reassurances that the corporations creditors are "willing to release her," no such releases were forthcoming and the record contains none.
A further indication how the settlement agreement clearly favors Hatfield over Moore is the trial court's dismissal of the derivative claims in Moore's cross-complaint against Hatfield, which she brought on behalf of the corporations based on Hatfield's alleged malfeasance in the management and operation of the corporations. These derivative claims were not alleged against the Lenders, were not based on the usury law, and were not part of the settlement agreement. Despite this, the trial court dismissed the claims in an amended order after a request in a letter to the court sent by respondents' counsel at the prompting of Hatfield's counsel. Indeed, the trial court had no authority to dismiss Moore's derivative claims against Hatfield in an order approving a settlement agreement pursuant to section 877.6. ( Housing Group v. Superior Court (1994) 24 Cal.App.4th 549, 552 ( Housing Group) [concluding that under section 877.6 the trial court is not authorized to "dismiss claims or cross-complaints at the same time that it makes a determination concerning the good faith of a settlement"].)
Whereas the trial court's dismissal of derivative claims against Hatfield is a further indicator of how the settlement agreement favors Hatfield, the settlement agreement does not meet the good faith requirements of section 877.6 on the basis of apportionment of liability alone. Accordingly, we need not reach respondents' contention that the settlement agreement can be affirmed by severing dismissal of the derivative claims.
The same might be said for Moore's derivative claims against the Lenders under the usury law. However, our conclusion that those claims have no legal basis is now the law of the case. ( Kowis v. Howard (1992) 3 Cal.4th 888, 892-893 ["The law of the case doctrine states that when, in deciding an appeal, an appellate court `states in its opinion a principle or rule of law necessary to the decision, that principle or rule becomes the law of the case and must be adhered to throughout its subsequent progress, both in the lower court and upon subsequent appeal.'"].) Accordingly, to correctly discharge those claims upon remand, Lenders may avail themselves of one the "mechanisms by which the good faith settlor may obtain dismissal of actions or cross-complaints." (See Housing Group, supra, 24 Cal.App.4th at p. 552.)
In sum, the settlement agreement expends corporate funds to release Hatfield and the corporations from further liability, corporate or personal, yet it leaves Moore, a 50% stakeholder in the corporations, personally liable on any and all claims asserted by the noteholders. Under the applicable Tech-Bilt standards, there can only be one conclusion — the settlement agreement is so far "out of the ballpark" ( Tech-Bilt, supra, 38 Cal.3d at p. 499) that it's a "Splash Hit" into "The Cove." More prosaically stated, it was "not a settlement in good faith within the meaning of section 877.6." ( Tech-Bilt, supra, 38 Cal.3d at p. 502.) Accordingly, the trial court's determination regarding a good faith settlement must be reversed.
(See Wikipedia, The Free Encyclopedia [as of August 23, 2010], ATT Park.)
DISPOSITION
In appeal No. Al 17526, the trial court's entry of judgment on the pleadings in favor of respondents Hill and Pean is affirmed. In appeal No. 118678, the trial court's determination that the settlement agreement at issue was in good faith within the meaning of section 877.6 is reversed. The parties shall bear their own costs on appeal.
McGuiness, P. J., and Pollak, J., concurred.
A petition for a rehearing was denied October 18, 2010, and appellant's petition for review by the Supreme Court was denied January 19, 2011, S188047.