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Court of Appeal, Second District, Division 2, California.

Lynn DAVIS and Alta L. Davis, Plaintiffs & Appellants, v. UNION OIL COMPANY OF CALIFORNIA, a California corporation, Hendy International Company, a corporation, Defendants & Respondents.

Civ. 63921.

Decided: September 03, 1982

Edward J. Horowitz, Los Angeles, for plaintiffs and appellants. Lillick, McHose & Charles, Francis J. MacLaughlin and Patrick G. Rogan and Lawrence Segal, Los Angeles, for defendants and respondents.

Plaintiffs, husband and wife, in an action for personal injury and loss of consortium, appeal from a judgment entered on a jury verdict awarding the wife $17,000 for her injuries and the husband $3,000 for loss of consortium.   They contend that the damages were inadequate.   We affirm.

On December 17, 1976, an oil tanker belonging to defendant was moored in the harbor at San Pedro.   It exploded.   Plaintiffs, who lived about two miles away, claimed that the wife was injured by the blast while she was in the act of putting up Christmas decorations in her living room.

Undisputed evidence discloses the wife had a rather serious preexisting arthritic and degenerative condition of the spine.   After the explosion she underwent a successful cervical laminectomy.   Plaintiffs claimed that as the result of the injury and the subsequent surgery, she was unable to continue in her occupation—that of maintaining a catering truck route.   The truck was sold for $12,000 and plaintiffs claimed that the loss of expected income thereafter amounted to some $200,000.

Defendant conceded liability for any damage resulting from the explosion.   The case was tried on the issues of causation and the amount of damages.   Perhaps the most strenuously contested issue was whether the surgery was necessitated by the preexisting condition or the result of the explosion.   Plaintiffs were unable to describe in any detail the nature of the trauma which the explosion inflicted on the wife.

Subsidiary issues which flowed from that dispute were whether the wife, in fact, could have continued to operate the business and whether the business would have produced the income claimed to have been lost.   We agree with plaintiff that the amount of the verdict tends to indicate that the jury awarded little, if any, damages for loss of prospective income.

Plaintiffs asserted the privilege of refusing to produce their tax returns, and proffered no evidence of consequence other than their own testimony concerning their income.   Their accountant, who was subpoenaed by the defendant, testified that he had no records or information concerning plaintiffs' income.

The trial court gave extensive and detailed instructions to the jury covering all of the principles of law applicable to determining damages, including the duty of the plaintiff to mitigate damages.

 Plaintiffs' first complaint here is that the trial court refused their proferred instruction to the effect that defendants had the burden of proving that the plaintiffs failed to mitigate damages.   We find no error.

Defendant did not plead plaintiffs' failure to mitigate damages as an affirmative defense.   The characterization of the evidence which plaintiffs describe as having been offered to prove such a failure depends upon how it is viewed.   Defendant never conceded that plaintiffs in fact were damaged as a result of the defendants' delict or that they were damaged in the amount claimed.   Thus defendants were not seeking to prove the plaintiffs failed to mitigate those damages.

Plaintiffs had the burden of proving their damages and defendant merely sought to establish that the damages claimed were not in fact suffered.   Under the circumstances there was no need to impose any burden of proof on the defendant.

 In any event no judgment may be reversed for error in instructions unless the reviewing court shall be of the opinion, based on the whole record, that the error has resulted in a miscarriage of justice.  (Edgett v. Fairchild (1957) 153 Cal.App.2d 734, 739, 314 P.2d 973.)   In Brokopp v. Ford Motor Co. (1977) 71 Cal.App.3d 841, 853, 139 Cal.Rptr. 888, the court stated:  “[A] miscarriage of justice should be declared only when the reviewing court is convinced after an examination of the entire case, including the evidence, that it is reasonably probable a result more favorable to the appellant would have been reached absent the error.  (Code Civ.Proc., § 475 ․)”  (See also Spahn v. Guild Industries Corp. (1979) 94 Cal.App.3d 143, 160, 156 Cal.Rptr. 375.)   The burden is upon appellants to demonstrate that prejudice resulted from an error and that such error justifies a reversal.   Prejudice is never presumed.  (Semple v. Andrews (1938) 27 Cal.App.2d 228, 235, 81 P.2d 203.)

Plaintiffs' other contention is that defense counsel's comments at trial concerning their income tax returns constituted prejudicial misconduct warranting reversal.   Defense counsel asked the husband on cross-examination if he was asserting the privilege to refuse to produce plaintiffs' tax returns.   Later in questioning economists for both plaintiffs and defense, defense counsel asked if the tax records were not records which would normally be considered in determining loss of income.   In summary, defense counsel did not ask any questions concerning the content of the returns but simply elicited the fact that tax returns existed, that they would be especially probative, and that plaintiffs refused to produce them.

After objections by plaintiffs' counsel, and at his request, the trial court instructed the jury that it was to draw no inference from the assertion of the privilege and was to disregard the matter entirely.  (Evid.Code, § 913.)   There was no request for a mistrial.

Subsequently, at defendant's request and in submitting the matter to the jury, the trial court instructed, inter alia, on the provisions of Evidence Code section 412, which provides that when a party has the power to produce stronger or more satisfactory evidence on an issue, the weaker evidence which he does offer should be viewed with distrust.   Plaintiffs do not challenge the propriety of that instruction.

The privilege against disclosing tax return information is based on Revenue and Taxation Code section 19282 et seq., which statutes enjoin disclosure by the Franchise Tax Board.   The privilege was extended, however, to efforts by third parties to obtain tax information in Webb v. Standard Oil Co., 49 Cal.2d 509, 319 P.2d 621.

In Webb, supra, the court reasoned that the objective of encouraging full and truthful disclosure by taxpayers would be subverted if private litigants could force disclosure of either federal or state tax returns and their content.

The privilege was further extended to cover the W–2 forms in Brown v. Superior Court, 71 Cal.App.3d 141, 139 Cal.Rptr. 327, where it was asserted by a plaintiff in a personal injury action who was claiming damages for lost income.

On the other hand, in Newson v. City of Oakland, 37 Cal.App.3d 1050, 112 Cal.Rptr. 890, a case decided earlier, the identical panel of justices that filed the opinion in Brown v. Superior Court, supra, held that a plaintiff in a personal injury case, again claiming damages for lost income, could not assert the privilege against self-incrimination against being forced to admit that he had failed to file any tax returns.

The court in Newson equated plaintiff's position with the waiver of the physician-patient privilege by a plaintiff who puts his physical condition at issue when seeking damages for a physical ailment.

Where a plaintiff puts his or her income in issue by claiming damages for its loss, the distinction between failing to report the income by not filing any return or failing to report the income fully when filing a tax return, seems to us to be rather nebulous.

 The logical inference to be drawn from the failure to file an income tax return is that the person did not earn any income.   The logical inference to be drawn from the refusal to disclose at least the amount of income reported by a plaintiff who claims loss of income is that the return would show less than the amount claimed.   If that is in fact the situation then either the existence of the privilege has failed to achieve its purpose or the plaintiff has falsely claimed damages which were not in fact suffered.

 Further, it should be pointed out that if in fact the plaintiff has under reported his income, the assertion of the privilege in his suit for damages does not insulate him against an examination of his return by the taxing authorities in light of his testimony concerning his actual income.

Were we writing on a clean slate and with the issue squarely presented, we would be inclined to find a waiver of the privilege under the circumstances of the case at bench.   However, we need not confront that issue at this time.   Our discussion of the issue, however, serves as a background for resolution of the issue which is presented and that is whether it was error for defense counsel to elicit the fact that plaintiffs had filed tax returns and refused to disclose the amount of income reported.

In criminal proceedings, where the privilege against self incrimination receives its greatest protection (Griffin v. California (1965) 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106) while the prosecuting attorney may not comment on the defendant's assertion of the privilege by the failure to testify, he can comment on the absence of evidence to controvert the prosecution's evidence or the defendant's failure to produce material evidence or logical witnesses, (People v. Chandler (1971) 17 Cal.App.3d 798, 95 Cal.Rptr. 146;  People v. Gray (1979) 91 Cal.App.3d 545, 154 Cal.Rptr. 555;  People v. Corona (1978) 80 Cal.App.3d 684, 145 Cal.Rptr. 894;  People v. Beyea (1974) 38 Cal.App.3d 176, 113 Cal.Rptr. 254) thus invoking the provisions of Evidence Code section 412.

 The privilege applicable to tax returns has not enjoyed as exalted a status as that of the privilege against self-incrimination.   A waiver of the privilege was found in a case where a taxpayer brought suit against an accountant for negligently handling her tax problem (Wilson v. Superior Court, 63 Cal.App.3d 825, 134 Cal.Rptr. 130) and in a case involving child support, the privilege was held to give way to “the greater public policy of enforcing child support obligation.”  (Miller v. Superior Court, 71 Cal.App.3d 145, at 149, 139 Cal.Rptr. 521.)   Further, it must be remembered that all privileges are designed as shields.   The law does not favor the use of a privilege as a sword.

For a plaintiff, as the moving party, to be able to testify to a large amount of lost income and at the same time keep the jury in total ignorance of the fact that he had the ability to produce more satisfactory evidence in the form of tax returns, would be to turn the privilege into a sword.

We are of the opinion, and plaintiffs do not argue to the contrary, that defendant here was entitled to the application of Evidence Code section 412.   The jury thus was correctly instructed to view with distrust plaintiffs' evidence of lost earnings for the reason that plaintiffs had the ability and failed to produce more satisfactory evidence.

That instruction, however, can have no meaning unless the jury is also advised of the existence and nature of the more satisfactory evidence and of plaintiffs' ability and failure to produce it.

Plaintiffs testified to the effect that they had kept business records which they inadvertently failed to bring to court from their home in Ohio where they had moved after the explosion.   From this they argue that Evidence Code section 412 was applicable to those records but not to the tax returns.

 Of course even those records, if they in fact existed and were produced, might not have been as satisfactory as the tax returns.   Plaintiffs cannot be permitted to put the defendant in an evidentiary strait jacket by simply testifying to the existence of some phantom records or producing records of less value than the tax returns in order to avoid the application of Evidence Code section 412 to their failure to produce their tax returns.

 Plaintiffs cannot “have their cake and eat it too.”  (Newson v. City of Oakland, supra, at 1055, 112 Cal.Rptr. 890;  City & County of S. F. v. Superior Court, 37 Cal.2d 227, at 232, 231 P.2d 26.)   Under the circumstances we hold that plaintiffs waived the protection of Evidence Code section 913.   Defendant was entitled to inform the jury that (1) the tax returns existed, (2) they were more satisfactory evidence of the plaintiffs' income than the evidence which was produced, and (3) that plaintiffs had asserted a privilege of non-disclosure.   Plaintiffs in obtaining a jury instruction in the language of Evidence Code section 913 thus received more than that to which they were entitled.

The judgment is affirmed.

COMPTON, Acting Presiding Justice.

BEACH and GATES, JJ., concur.

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