Filed 11/10/15 Takeda v. Akiyama Tsukemono California, Inc. CA2/8
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                 DIVISION EIGHT

KAZUTO TAKEDA,                                                       B261858

                            Plaintiff and Appellant,                 (Los Angeles County
                                                                      Super. Ct. No. YC056502)
                   v.

AKIYAMA TSUKEMONO
CALIFORNIA, INC., et al.,

                   Defendants and Respondents.



         APPEAL from a judgment of the Superior Court of Los Angeles County.
Ramona G. See, Judge. Reversed and remanded.



         Law Offices of Robert W. Cohen, Robert W. Cohen and Mariko Taenaka for
Plaintiff and Appellant.



         Law Offices of Joseph F. Hart and Joseph F. Hart for Defendant and Respondent.




                                       __________________________
       Plaintiff Kazuto Takeda appeals from the judgment entered in his favor against
defendant Akiyama Tsukemono, California, Inc., contending that in this retrial on the
issue of damages the trial court erred by excluding evidence of a damages calculation
summary both parties had prepared. We agree and therefore reverse and remand for a
new trial on the damages issue.


                      FACTS AND PROCEDURAL HISTORY1

       Kazuto Takeda owned Ebisu Market, a Japanese grocery store in Fountain Valley.
Takeda bought pickled food products known as tsukemono from Akiyama Tsukemono
California, Inc. For many years Akiyama employee Makoto Miyahara made twice-
weekly deliveries to Takeda’s market, and Takeda relied on him to check his shelves and
determine how much of each product he needed to order.
       In order to obtain a discount, Takeda paid in cash at the time of each delivery.
Deliveryman Miyahara would give Takeda an invoice showing how much of each
product he had delivered, and would then give a copy of that invoice to his employer, the
Akiyama company. When Miyahara went on vacation in September 2006, Takeda
noticed that the substitute deliveryman was ordering and delivering a much smaller
amount of tsukemono products.
       Takeda contacted Katsuhisa Yamanaka, the president of Akiyama, and the two
prepared a summary based on a comparison of their respective invoices which showed
that the market’s invoices reflected average deliveries of $300 while the invoice copies
turned in to Akiyama showed average deliveries of $100.2 The market concluded that
Miyahara had swindled it for several years by overstating the amount ordered, reporting


1      Some portion of our statement of facts comes from our previous decision in this
matter. (Naylor v. Akiyama Tsukemono California, Inc. (June 18, 2012, B231028)
[nonpub. opn.].)

2      For ease of reference, we will hereafter refer to Takeda and Ebisu Market
collectively as the market and to Yamanaka and Akiyama Tsukemono California, Inc., as
the supplier.
                                             2
the correct lower amount to the supplier, and then pocketing the difference. Miyahara
admitted the fraud but contended it worked the other way, with him delivering the correct
amount to the market, submitting an invoice to his employer showing that much less had
been delivered, and then keeping the difference.
       The summary prepared by the market and the supplier was based on twice-weekly
deliveries from 2000 through August 2006, and added up to approximately $120,000.
Between its deposition testimony and testimony at the damages retrial that is the subject
of this appeal, the supplier said it had not yet seen the market’s invoices when the
summary was prepared, but did see them later. Invoices from 2001 had been water
damaged, however, causing both parties to estimate the amounts involved for that year.
Even though the figures on the market’s invoices matched those supplied by the market
for the damages summary, the supplier believed that check marks on the market’s
invoices meant that the products listed had been delivered, leading it to conclude that the
market had received most, if not all, the products and that it was the one that had been
cheated. The supplier also testified that the supposed discrepancies were not consistently
$200 because his invoices showed that the amount delivered to the market often
fluctuated from $70 to $120. The supplier was therefore willing to pay approximately
$45,000 to the market to settle the matter. The parties did not reach a settlement.
       The market sued Miyahara (the deliveryman) and the supplier.3 After a bench trial
in 2010, the trial court found Miyahara liable for fraud and punitive damages, but found
that the supplier was not liable for its employee’s misconduct. The trial court believed
that the damages summary prepared by the parties was merely an attempt to calculate
damages without any basis. Even so, the trial court accepted the summary’s $200
discrepancy calculation, but awarded damages of only $14,400 for once-monthly




3     That led to an appeal by the market challenging the trial court’s decision to grant
Miyahara equitable relief from a default judgment, an order that we affirmed. (Takeda v.
Akiyama Tsukemono California, Inc. (Jan. 28, 2010, B213462) [nonpub. opn.]
(Takeda I.)
                                             3
deliveries on the mistaken assumption that there was no evidence concerning the
frequency of deliveries.
       The market brought a motion to set aside the judgment, contending that the trial
court erred by awarding damages based on only one delivery per month and by failing to
hold the supplier liable for Miyahara’s fraud. The original trial judge had retired and the
new judge treated the motion as one for reconsideration. The second judge agreed that
the supplier was liable for Miyahara’s fraud but declined to increase the damage award
because the evidence was in conflict and had led the first judge to come up with a number
that the second judge was unwilling to second guess. In its amended statement of
decision, the trial court termed the damages summary spreadsheet a “guess” because it
was based solely on the delivery invoices, without any supporting documentation such as
cash register receipts, inventory records, or other accounts of the market’s sales of
tsukemono products.4 The trial court still found that there was an approximate
discrepancy of $200 per delivery, but left in place the first judge’s finding that deliveries
occurred only monthly.
       The market appealed the judgment and we reversed. (Naylor v. Akiyama
Tsukemono California, Inc. (June 18, 2012, B231028) [nonpub. opn.].)5 We held that
both trial courts erred by determining there was no evidence of anything other than
monthly deliveries because the evidence was undisputed that deliveries occurred twice-
weekly. Even though both trial courts found an average discrepancy of $200 per
delivery, we declined to order a eight-fold increase in the judgment, instead ordering a
new trial on damages because both judges had been troubled by the adequacy of Takeda’s
evidence on that point.



4      Takeda testified at the first trial that he bought the market in 1984 and still used
the old cash register system, which did not accept bar codes or otherwise allow for
inventory tracking.

5      That appeal was brought by the then-bankruptcy trustee for Ebisu Market. For
ease of reference, and to avoid confusion, we will refer to it as Takeda II.
                                              4
       The damages retrial was conducted by a third judge. The market did not introduce
in evidence all of the several hundred invoices showing its purchases from the supplier
over the years. Instead, the market relied heavily on the damages summary it prepared
with the supplier and introduced a limited number of invoices that it compared with the
supposedly corresponding invoices the deliveryman gave the supplier. The trial court
allowed the market to testify about the damages summary and then question the supplier
about its contents. Based on the damages summary and the previous deposition
testimony of the supplier, the market’s accounting expert testified that the market’s
damages were more than $127,000, plus another $136,755 in prejudgment interest. The
expert had not audited the market’s invoices, relying instead on the supplier’s own
assessment of what the invoices showed. However, the trial court withheld ruling on the
admissibility of the damages summary, in part out of concerns that it had been prepared
for settlement, and in part because it was concerned that the document lacked the proper
foundation and was based on hearsay. The trial court refused the market’s request to
admit in evidence all of the invoices toward the end of the trial. The market argued that
the supplier would suffer no prejudice because it had already seen the invoices. The
market also pointed out that it had elected to rely primarily on the damages summary in
order to avoid burdening the court with all of the invoices.
       When the supplier later tried to introduce evidence to support its contention that
the market received the full amount of products listed on the supplier’s invoices, the trial
court sustained the market’s objections, stating that the two previous trial courts had
already determined that “the liability was all on your side.”
       The trial court issued a statement of decision awarding the market damages of
$23,265.55. In order to reach this figure, the trial court ruled that the damages summary
spreadsheet was inadmissible because, without the invoices upon which the calculations
were based, the document lacked foundation. As a result, the trial court ruled that the
testimony of the market’s accounting expert was also “of no assistance to the court”
because his opinions were based upon the damages summary without any review of the
underlying invoices.

                                              5
       Absent those invoices, the trial court characterized the market’s evidence as a
“pitiful bundle” of invoices, many of which were illegible. The trial court believed this
court ordered a new trial because we had concluded the evidence supporting the market’s
claims was “woefully inadequate and troublesome.”6 The trial court noted that the
invoices it saw showed that the market was overcharged from $47 to $425 per delivery
over the course of several years. After eliminating damages for the years 2000 and 2001
because the market submitted no invoices for those years, the trial court set forth the
discrepancies in 118 invoices from 2002 through 2006. The total came to $23,265.55.
       The market brought a motion to set aside the judgment, contending in part that the
trial court erred by excluding the damages summary spreadsheet evidence and the
testimony of its accounting expert. The trial court denied that motion, stating in its
minute order that the damages summary was properly objected to because it was hearsay
and lacked foundation, and that the trial court therefore had the discretion to disregard the
expert’s testimony.

                                          DISCUSSION

       The trial court excluded evidence of the damages summary performed by the
market and the supplier, along with the derivative testimony of the market’s accounting
expert, because it believed that evidence was not admissible unless the market also
introduced all the underlying invoices upon which the summary was based. The trial
court erred.
       Evidence Code section 1523, subdivision (d) provides: “Oral testimony of the
content of a writing is not made inadmissible . . . if the writing consists of numerous
accounts or other writings that cannot be examined in court without great loss of time,
and the evidence sought from them is only the general result of the whole.” This section

6      We did not say that. Instead, we reversed and ordered a new trial on damages in
deference to the qualms that the earlier trial courts had about the adequacy of the
market’s damages evidence. Despite those qualms, however, the first two trial judges felt
enough confidence in the damages summary not only to consider the summary but to
award damages based on the average discrepancy represented by that summary.
                                              6
continues without substantive change former Evidence Code section 1509. (Cal. Law
Revision Com. com., West’s Desktop Evid. Code (2015 ed.) foll. § 1523, pp. 313-314.)
       Former section 1509 provided: “ ‘Secondary evidence, whether written or oral, of
the content of a writing is not made inadmissible by the best evidence rule if the writing
consists of numerous accounts or other writings that cannot be examined in court without
great loss of time, and the evidence sought from them is only the general result of the
whole; but the court in its discretion may require that such accounts or other writings be
produced for inspection by the adverse party.’ ” (See Wolfen v. Clinical Data, Inc.
(1993) 16 Cal.App.4th 171, 182 (Wolfen).)
       Under this rule, a person who directs or supervises the preparation of a summary
may testify to its contents and the summary may be received in evidence. (Vanguard
Recording Society, Inc. v. Fantasy Records, Inc. (1972) 24 Cal.App.3d 410, 419.) In
Wolfen, supra, 16 Cal.App.4th 171, the Court of Appeal affirmed the judgment for a
commercial lessor to recover the cost of repairs due to damage caused by a tenant. In
doing, so, the court held that the trial court properly allowed evidence of the lessor’s
damages summary, which was prepared from the underlying repair invoices and other
documents. (Id. at p. 183.)
       We conclude that this rule applied to the damages summary jointly prepared by
the market and the supplier.7 First, with eight deliveries a month spanning a period of
several years, the market would have had in its possession approximately 544 delivery
invoices.8 That would leave the trial court having to compare an equal number of



7      The supplier does not address this issue at all. Instead, its appellate brief is based
on the mistaken notion that the issue is one of substantial evidence to support the
judgment. As the market points out in its reply brief, the issue is whether the trial court
erred by excluding key evidence. We do not treat this as a waiver by the supplier and
therefore reach the issue raised by the market on its merits. (Planning & Conservation
League v. Castaic Water Agency (2009) 180 Cal.App.4th 210, 227.)

8      We reach this figure by excluding invoices for the year 2001, which were missing.
That leaves invoices for all of 2000 and 2002 through 2005, along with eight months in
                                              7
invoices from the supplier as well, an amount of writings that easily qualifies as
numerous. (§ 1523, subd. (d).) Second, even though the supplier had not yet seen the
market’s invoices when the summary was prepared, it acknowledged receiving those later
and confirmed that the figures matched those provided by the market. Third, although
the supplier believed that certain check marks on some of the market’s invoices indicated
that the market had in fact received the full amount of products, the trial court resolved
this issue against the supplier when it awarded the market the full amount of the
discrepancies shown between the limited sets of invoices that were in evidence. The trial
court therefore erred by excluding evidence of the damages summary and, by extension,
the testimony of the market’s accounting expert.
       Even though error occurred, we can reverse only if it is reasonably probable the
market would have obtained a different result absent the error. (§ 354; California Crane
School, Inc. v. National Comm. for Certification of Crane Operators (2014)
226 Cal.App.4th 12, 24.) As noted, the trial court was willing to award the market the
full amount of the discrepancy that was shown by the legible invoices that were admitted
in evidence. In fact, the trial court awarded the market $23,265.55 based on the
discrepancies shown in 118 invoices. That works out to an average of $197.16 per
delivery, remarkably close to the $200 average discrepancy obtained from the parties’
damages summary. It is therefore reasonably probable that the market would have
obtained a larger damage award had the trial court admitted evidence of the damages
summary.
       The market asks that we enter judgment for it based on the figures represented by
the damages summary. We understand its request and are reluctant to send this case back
for another retrial. However, there are some questions that the existence of the damages
summary do not answer, especially in regard to the missing invoices from 2001.
Although it might be reasonable to infer from the summary that the same average
discrepancies occurred during that year, a trier of fact could find otherwise, significantly

2006. At eight invoices a month, the market would have 96 invoices for each full year
plus another 64 from January through August 2006.
                                              8
affecting the potential amount of damages. We therefore remand the matter for a new
trial on the issue of damages.9

                                         DISPOSITION

       The judgment is reversed and the matter is remanded for a new trial on the issue of
damages only. Appellant Takeda shall recover his costs on appeal.




                                           RUBIN, J.


WE CONCUR:



              BIGELOW, P. J.



              FLIER, J.




9      As a result, we need not reach the other issue raised by the market – that the trial
court erred by failing to award it prejudgment interest.
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