Unreported / Non-Citable
Background
Jacob Michelson and Michael Ayzenberg began exporting nutritional supplements to Russia under the name Elixir in 2014 without a written agreement defining their arrangement. Michelson described a 50/50 partnership, while Ayzenberg denied that they were full partners. Their business relationship ended in January 2018 after Michelson learned of transfers from Elixir to Ayzenberg's United States company. Michelson sued in November 2020, and the operative complaint asserted breach of contract, accounting, breach of fiduciary duty, unjust enrichment, and declaratory relief claims.
Ayzenberg unsuccessfully demurred and moved for summary judgment, principally arguing that the claims were time-barred. At trial, however, he did not present a limitations defense or request corresponding jury instructions. Each side offered accounting expert testimony. Michelson's expert reconstructed Elixir's finances from bank statements and other records and calculated that Ayzenberg owed $745,627 in unpaid profits and reimbursements. The defense expert offered a substantially lower view of Elixir's revenue and profits, although the court excluded portions of her testimony based on late or unproduced materials.
The jury returned a general verdict for Michelson and awarded $634,000. The trial court subsequently awarded $273,575.50 in prejudgment interest. Ayzenberg appealed, challenging the pretrial limitations rulings, a willful-suppression instruction, exclusion of his expert's evidence, the evidentiary support for damages, and multiple aspects of the interest award.
The Court’s Holding
The Court of Appeal affirmed. It held that Ayzenberg forfeited his limitations challenges by abandoning that defense at trial. Reversing on accrual would prejudice Michelson, who had no reason to develop accrual evidence after Ayzenberg stopped asserting the defense. The court also declined to consider Ayzenberg's as-applied constitutional challenge to out-of-state tolling as a purely legal issue: the record did not establish the necessary uncontroverted facts, the reasons for his travel had not been resolved, and the fiduciary-duty claim remained timely under its longer limitations period regardless of that tolling statute.
The spoliation-instruction challenge was also forfeited because both sides proposed the instruction and Ayzenberg did not object. The court found no abuse of discretion in excluding the defense expert's reliance on late reports and invoices not shown to have been produced. She still testified that Elixir's sales were about $2 million and criticized Michelson's accounting. The court rejected the argument that an admitted exhibit supplied the bottle quantities and prices needed for her excluded average-price calculation, and it upheld rejection of a posttrial declaration attempting to establish earlier disclosure.
Substantial evidence supported the damages award. Michelson's interrogatory answer listing $614,282.23 in receipts did not establish that every payment was a profit distribution, and his testimony identified reimbursements, creating a jury issue rather than an unexplained contradiction. The appellate court would not reweigh the competing accounting evidence, and the verdict was below Michelson's expert's total calculation. Finally, the general verdict did not bar prejudgment interest because the trial court found that breach of contract alone supported the entire award. Uncertain damages and a bona fide dispute did not preclude interest under Civil Code section 3287(b), and the court acted within its discretion in awarding interest from the filing date after allocating responsibility for delay. Michelson received costs on appeal.
Key Takeaways
- A defendant who loses pretrial limitations motions but does not present the defense or request instructions at trial may forfeit appellate challenges to those rulings.
- An appellate court may decline a supposedly pure legal question when unresolved facts and missing trial evidence bear on the issue.
- Requesting a willful-suppression instruction and failing to object can forfeit a later claim that the evidence did not support it.
- Trial courts may exclude expert opinions grounded in late or unproduced materials without excluding the expert's entire analysis.
- A general verdict does not necessarily prevent prejudgment interest when the trial court reasonably determines that a contract theory supports the full award.
Why It Matters
The decision illustrates how trial conduct can independently dispose of several appellate arguments before the court reaches their merits. Ayzenberg's abandonment of limitations, joint request for the challenged instruction, and inability to establish timely disclosure of expert materials shaped the review of each issue.
The interest analysis also distinguishes uncertainty in calculating damages from legal uncertainty about entitlement to interest. It confirms that section 3287(b) permits discretionary interest on unliquidated contract claims and that trial courts may apportion responsibility for delay when selecting a permissible start date.