SAN JOSE -- A San Jose man was found guilty of second-degree murder Wednesday in the 2011 killing of his mistress that started with a spat over a designer handbag and a few hours later ended with a violent stabbing.

Jurors will now hear testimony to determine whether Peter Shui was sane when he killed his 34-year-old mistress Stella Zheng during an argument at her San Jose apartment in August 2011. Shui pleaded not guilty by reason of insanity.

The eight-woman, four-man jury was not made aware there could be a sanity phase of the trial because Shui's lawyer hoped the panel would convict him of the lesser crime of manslaughter, offering his client the chance to avoid such a further hearing. Now, a successful insanity verdict would mean Shui gets sent to a state mental hospital -- from which he could be released once he is treated -- instead of a prison for 15 years to life. A manslaughter verdict might have gotten him as little as five or six years in prison.

Shui sat stoically and showed little reaction as the court clerk for Judge David A. Cena announced the jury's verdict.

Court testimony revealed the conflict was spurred by an encounter between Zheng and Shui's wife Mei at a West Valley shopping center. Zheng was sporting a high-priced Louis Vuitton bag, which Mei suspected had been bought by her husband, which angered her given that he was an unemployed gambler with serious financial troubles.

Shui insisted to his wife that Zheng bought the bag herself. Later that day Zheng and Shui got into an argument when the mistress insulted his wife and mother. An enraged Shui got a knife and warned her to stop, and when she didn't he stabbed her at least a dozen times, killing her.

Shui attorney Rod O'Connor argued his client was intoxicated and may have been under the effects of a sleeping pill, and should be convicted of manslaughter. Prosecutor Erin West pushed for a murder conviction, saying Shui is an alcoholic with a high tolerance and that his judgment was not clouded when he killed Zheng.

Second-degree murder is distinct from first-degree murder in that it does not involve premeditation, but is deliberate enough to negate the "heat of passion" claim that is often a pillar of manslaughter.

Staff writer Tracey Kaplan contributed to this report. Contact Robert Salonga at 408-920-5002. Follow him at Twitter.com/robertsalonga.