Filed 11/25/19 Abassi v. Fouladi CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

MAHMOUD REZAI ABASSI,

Plaintiff and Appellant,

v.

TAGHI FOULADI et al.,

Defendants and Respondents.

G056665

(Super. Ct. No. 30-2014-00715998)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Sheila Fell, Judge. Affirmed in part and reversed in part. Motion for judicial notice granted.

Benice Law and Jeffrey S. Benice for Plaintiff and Appellant.

Newmeyer & Dillion, Thomas F. Newmeyer and Manoosh Shakib for Defendants and Respondents.

* * *

Mahmoud Rezai Abassi invested money with his nephew Hossein Abassi. Hossein operates, along with his partner Taghi Fouladi, two Laguna Beach restaurants. In an earlier action, Mahmoud successfully sued his nephew and recovered his share of Hossein’s underreported profits (about $245,000). This court affirmed the judgment on appeal. (Abassi v. Abassi (Jun. 20, 2016, G051596) [nonpub. opn.] (Abassi I).)

In this case, Mahmoud again sued Hossein; this time for Hossein’s alleged ongoing fraudulent accounting and related claims. Mahmoud also named as defendants Hossein’s business partner Fouladi, and other related entities (collectively Fouladi). Mahmoud asserted seven causes of action as to Fouladi, who filed a demurer to Mahmoud’s fourth amended complaint (FAC). The trial court sustained Fouladi’s demurer without leave to amend and dismissed the action. Mahmoud appeals.

We hold that Mahmoud failed to allege facts sufficient to support one cause of action (transfer of interests), and one purported cause of action is actually a remedy (constructive trust). However, Mahmoud met the pleading requirements as to five causes of action (generally, under an aider and abettor theory). Thus, as to the trial court’s sustaining of Fouladi’s demurrer, we affirm the judgment in part and reverse in part.

I

FACTS AND PROCEDURAL BACKGOUND

Mahmoud’s current lawsuit is largely based on the types of accounting practices described in Abassi I, supra, G051596. Therefore, we will first quote extensively from that opinion (all footnotes omitted), and then we will summarize the procedural posture of the current lawsuit:

“This is a case in which there are three main characters: An uncle, Mahmoud; a nephew, Hossein; and Hossein’s business partner, Fouladi. Both Hossein and Fouladi met while working for Fluor Corporation in Iran at the time of the late 1970’s Iranian revolution. Both escaped to the United States. Once here, Fouladi decided to open a small business of his own and, despite being trained as an engineer, went into the restaurant business. He found a run-down hot dog stand in Laguna Beach, fixed it up and made it ‘Greeter’s Corner.’ Fouladi thought of Hossein as a son, and soon asked him to become a partner in the new business.

“Hossein agreed. And that was where his uncle Mahmoud came in. Mahmoud was still living in Iran, and, like many Iranians, wanted to get his money out of the country. He sent Hossein $200,000 to be used for investment. Hossein used some of the $200,000 for his initial capital contribution to the restaurant, but did not tell Fouladi about it.

“Greeter’s Corner prospered, allowing Hossein and Fouladi to purchase, in the mid–1980’s, C’est La Vie a few doors to the south. In 1986, uncle Mahmoud moved to the United States and to Fouladi’s surprise, inquired how ‘their’ restaurants were doing. Mahmoud was shocked to learn he was not a named partner.

“At that point, the Hossein–Mahmoud relationship became litigious. Mahmoud filed this action, case number 528149, on July 1, 1987. The case went to arbitration. The arbitration resulted in a formal arbitration decision written by then-retired Judge Warren Knight, filed in November 1989 (the ‘Knight judgment’) which delineated the precise legal relationship between Hossein and his uncle Mahmoud. Judge Knight ascertained that there was only one partnership, the Hossein–Fouladi partnership, but Hossein had assigned half of his interest in that partnership to Mahmoud.

“More litigation ensued in the early 1990’s. In late 1990, a judgment was entered after a court trial in front of Judge Jack Mandel (the ‘Mandel judgment’) declaring that Hossein ‘has agreed to pay’ Mahmoud $175,000 ‘pursuant to’ a typewritten agreement between Hossein and Mahmoud dated February 3, 1987, which was attached to the judgment. That document included language to the effect that Mahmoud would not only be ‘entitled to twenty-five percent of all net profits,’ but that he also ‘agrees to assume twenty-five percent of any losses incurred by the restaurants.’

“The Mandel judgment declared that, from then on, Hossein would owe Mahmoud ‘25% of the net profits of the Greeter Corner and C’est La Vie restaurants, and in no event shall [that] be less than 1/2 of . . . Fouladi’s draw from said restaurants.’ The judgment also stated: ‘The Superior Court retains jurisdiction to determine amounts due in the future pursuant to this judgment and to enforce any part of this judgment.’

“Mahmoud apparently had to go to court one more time in what we might call the antique epoch of this case—the early 1990’s—to press for his 25 percent of profits. An amended order after a referee’s report filed September 1992 (the ‘Knox judgment’ named for the late Judge Robert Knox, referee at the time) required Hossein to pay to Mahmoud a sum of a little more than $37,000 for 1990 and a sum of a little more than $50,000 for 1991. But the 1992 Knox judgment added this gloss: Starting in 1993, Hossein was to send copies of the partnership tax returns to Mahmoud with an explanation of net income. Mahmoud would then have 30 days to object in writing if he disagreed with the ‘sum due,’ and if the parties could not agree on that sum within that 30 days, Mahmoud would have another 10 days to file with the referee ‘a motion for an order to pay based upon an evidentiary hearing.’ Otherwise Mahmoud would be deemed to have accepted Hossein’s version of what was owed.

“Fast forward to 2011, the next event in our record. By this time the previous referee was no longer available, so Mahmoud applied to the court for appointment of a new referee. For reasons that are not entirely clear from the record, the new referee did not hold a hearing until June of 2014.

“It is the report from that hearing, and the ensuing adoption of most of it by the trial court in the judgment in this case (the ‘Miller judgment,’ after Franz Miller, the Orange County Superior Court judge who received the report from referee Smith) that has generated this appeal [Abassi I]. The hearing encompassed Mahmoud’s claims for profits from Greeter’s Corner and C’est La Vie during the period 2005 through 2013 (inclusive). Hossein began the hearing behind in the count, since he acknowledged right off the bat that he hadn’t paid anything at all to his uncle in the period 2005 to 2013, and agreed he owed $56,038.

“It also didn’t help Hossein that Mahmoud presented not just one, but two expert witnesses attacking the reliability of the Hossein–Fouladi partnership’s accounting systems for the two restaurants. One of Mahmoud’s experts, CPA James O’Leary, opined that the partnership’s general ledger was unreliable, since he found discrepancies of $169,885 between what the general ledger said and what the tax returns indicated. [Footnote omitted.] His other expert, restaurateur Kevin Johnson, faulted the partnership for using old-fashioned cash registers instead of a computerized ‘point of sale system.’ A point of sale system will track all funds, even tips and cash transactions. By contrast an old-fashioned cash register is susceptible to manipulation by allowing cash transactions to be unrecorded. Johnson too opined that the partnership’s general ledger was ‘not reliable.’

“The main reason for the discrepancies in the ledger—a difference between what the tax returns showed as rent and what the ledger showed—became the major focus of the hearing. Fouladi is the landlord for Greeter’s Corner, [footnote omitted] as well as having a 50 percent partnership interest in the two restaurants. Much of the hearing thus centered on a fairly unusual landlord-tenant arrangement between the Hossein–Fouladi partnership for Greeter’s Corner and Fouladi in his role as the landlord: The partnership would write rent checks but they would not be cashed unless there was money in the account. It might be years before the rent checks would be cashed—if ever. In fact, during the hearing, Hossein admitted there was a period of three-and-one-half years in which Greeter’s Corner partnership rent checks were simply never cashed. Hossein argued (and continues to argue on appeal) that Fouladi’s forbearance in cashing the checks was a mere cash-flow device by which Fouladi was loaning the restaurants money when cash was not available.

“On the other hand, the fact the checks weren’t cashed did not stop the Hossein–Fouladi partnership from including all the checks written in a given year as rent expense on that year’s partnership tax returns. At the hearing Mahmoud’s counsel repeatedly confronted Hossein with the fact that only a certain relatively low amount of rent checks had been cashed during a given year, but the tax returns claimed all rent checks written in that year as deductible expenses.

“Hossein’s response to these questions did not inspire confidence. Every time he was asked to explain the discrepancy between the total of rent checks actually cashed in a given year and what the tax returns said, he simply said, ‘I don’t know.’ An expert witness appearing for Hossein, CPA Jaime Holmes, maintained that deducting all checks written in a given year was perfectly legitimate, even in light of the partnership’s use of a ‘cash’—as distinct from ‘accrual’—basis accounting system. Holmes opined that the partnership had ‘relinquished control’ over the funds when it wrote each check.

“Hossein, however, presented no evidence that Fouladi himself, in his role as landlord of Greeter’s Corner, had included into his own taxable income the uncashed rent checks the Greeter’s Corner partnership was deducting. To be sure there was, on cross-examination, an extended contretemps between Mahmoud’s counsel and CPA Holmes over the point. But the most that Holmes was able to say to support his belief that Fouladi had included uncashed checks on his own income tax returns was that he had been told that by the preparer of the partnerships’ tax returns, a CPA by the name of Carl Rizzo. Holmes ultimately admitted he never saw a source document establishing that Fouladi actually paid tax on what the Greeter’s Corner partnership had deducted. Neither Rizzo nor Fouladi testified at the hearing.

“The hearing also elicited evidence that the Greeter’s Corner partnership had loaned Hossein himself $42,000 and also loaned Hossein’s sister (a manager at C’est La Vie) $70,000, for a total of $112,000. Referee Smith thought the loans should be characterized as partnership profits, and his initial report proposed to give Mahmoud half ($56,000) of that amount. Judge Miller, however, recognizing that a portion of those loans had actually been paid back, reduced the total award based on the loans to $28,218.75. (This later figure includes interest. There is no issue in this appeal as to the math, i.e., whether the trial court correctly computed the amounts paid back.)

“Overall, the trial court awarded a total of $244,841.75, though much of that was interest at 7 percent. The constituent parts of the judgment (interest included) were: $10,787 for the cost of the referee (a sum already advanced by Mahmoud), $152,989 (including interest) for Mahmoud’s 25 percent share of the profits over the period 2005 to 2013 (calculated to be $112,138); $63,634 as Mahmoud’s share of outstanding uncashed rent checks (the total being $224,698) and $28,218.75 as Mahmoud’s share of the outstanding loans to Hossein and his sister.” (Abassi I, supra, G051596.) This court affirmed the judgment on appeal. (Ibid.)

The Current Lawsuit

In the current lawsuit, Mahmoud filed a complaint against Hossein, Fouladi, and others for alleged fraudulent accounting. Mahmoud alleged facts regarding the accounting of the two Laguna Beach restaurants (essentially mirroring the accounting practices recounted in Abassi I, supra, G051596, and including ongoing alleged fraudulent conduct). Mahmoud alleged general and special damages of “no less than $1,000,000.00”; punitive damages; “the imposition of a constructive trust”; and other related costs and fees.

Mahmoud alleged seven causes of action against Fouladi: transfer of interests; breach of fiduciary duty; constructive fraud; fraudulent concealment; constructive trust; accounting; and financial elder abuse. Fouladi filed a demurrer.

Mahmoud filed successive amended complaints; Fouladi responded by filing demurrers. The trial court generally sustained Fouladi’s demurrers with leave to amend. But as to the third amended complaint, the court sustained Fouladi’s demurrer “with one final 10 days leave to amend.”

Mahmoud filed the FAC. Fouladi again filed a demurrer. The trial court conducted a hearing on Fouladi’s demurrer. The court sustained as to all seven causes of action, denied leave to amend, and later dismissed the action.

Mahmoud filed an appeal. Mahmoud included the following documents on appeal: Abassi I, supra, G051596; the underlying judgments in Abassi I; the FAC in the instant case; the trial court’s judgment in the instant case; and his notice of appeal. Fouladi filed additional documents on appeal, which included the underlying minute orders and notice of ruling. Neither party filed any reporter’s transcripts.

II

DISCUSSION

Mahmoud argues the trial court committed an error as a matter of law by sustaining Fouladi’s demurrer to the FAC. Mahmoud further argues that the court abused its discretion by not granting him leave to amend the FAC.

A. General Legal Principles Involving Demurrers

A plaintiff initiates a lawsuit by filing a complaint. In the complaint, the plaintiff is required to state “the facts constituting the cause of action, in ordinary and concise language.” (Code Civ. Proc., § 425.10, subd. (a)(1).) Normally, a defendant files an answer challenging the merits of the complaint; however, the defendant may instead file a demurrer, which challenges the legal sufficiency of the complaint. (§ 430.30.) By filing a demurrer, the defendant is essentially asserting that even if all of the facts alleged by the plaintiff are true, there is no legal basis to proceed with the lawsuit. (King v. CompPartners, Inc. (2018) 5 Cal.5th 1039, 1049, fn. 2.)

When a defendant files a general demurrer, the trial court reviews the sufficiency of the complaint; the court treats the demurrer as admitting all material facts properly pleaded, but not the plaintiff’s contentions, deductions, or conclusions of fact or law. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The court then determines whether the complaint states facts sufficient to constitute each cause of action. (Ibid.)

On appeal, an appellant “bears the burden of demonstrating that the trial court erroneously sustained the demurrer as a matter of law.” (Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43.) A reviewing court analyzes “the complaint de novo to determine whether it alleges facts stating a cause of action under any legal theory.” (Ibid.) An appellant “must show the complaint alleges facts sufficient to establish every element of each cause of action. If the complaint fails to plead, or if the [respondent] negates, any essential element of a particular cause of action, [the reviewing] court should affirm the sustaining of the demurrer.” (Ibid.)

“When a demurrer is sustained without leave to amend,” a reviewing court “decides whether a reasonable possibility exists that amendment may cure the defect.” (Rakestraw v. California Physicians’ Service, supra, 81 Cal.App.4th at p. 43.) “However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. [Citation.] And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Payne v. National Collection Systems, Inc. (2001) 91 Cal.App.4th 1037, 1043-1044, italics added.)

B. Analysis

We will analyze each cause of action Mahmoud alleged as to Fouladi in the FAC: 1) Transfer of Interests (Corp. Code, § 16503); 2) Breach of Fiduciary Duty; 3) Constructive Fraud; 4) Fraudulent Concealment; 5) Constructive Trust; 6) Accounting; and 7) Financial Elder Abuse (Welf. & Inst. Code, § 15600 et seq.). That is, we will presume that the facts alleged by Mahmoud are true, and then independently determine whether the FAC “alleges facts stating a cause of action under any legal theory.” (Rakestraw v. California Physicians’ Service, supra, 81 Cal.App.4th at p. 43.)

1. Transfer of Interests (Corporations Code Section 16503)

“A transferee of a partner’s transferrable interest in the partnership has a right to . . . : [¶] . . . receive . . . distributions to which the transferor would otherwise be entitled.” (Corp. Code, § 16503, subd. (b)(1).)

A partnership is an “association of two or more persons to carry on as coowners as a business for profit” formed under the California Corporations Code. (Corp. Code, § 16202, subd. (a).) A partnership is a legal entity that is entirely distinct from its individual partners. (Corp. Code, § 16100 et seq.) A partner is not a coowner of partnership property and has no transferable interest in partnership property. (Corp. Code, § 16501.) Rather, a partner’s only transferable interest is that partner’s personal property interest in a share of the partnership’s profits and losses and the right to receive partnership distributions. (Corp. Code, § 16502.)

A partner may transfer his or her interest in the partnership (profits and losses); the transfer neither dissociates the partner, nor does it cause a dissolution of the partnership. (Corp. Code, § 16503, subd. (a)(1).) A transfer is defined as: “An act of the parties, or of the law, by which the title to property is conveyed from one person to another.” (Black’s Law Dict. (6th ed. 1990) p. 1497, col. 2.)

Here, the partnership at issue is between Mahmoud’s nephew Hossein and his 50/50 partner Fouladi, as coowners of the two Laguna Beach restaurants. There is no allegation in the FAC that Fouladi at any point transferred his transferable interest in the Hossein-Fouladi partnership to his partner’s uncle Mahmoud. There is also no allegation that Hossein transferred his transferable interest in the Hossein-Fouladi partnership to his uncle Mahmoud. Moreover, there is no allegation that the court in the earlier action at any point transferred either Hossein’s or Fouladi’s transferrable interest in the Hossein-Fouladi partnership to Mahmoud. (See Abassi I, supra, G051596 [“Mahmoud’s interest in the restaurants was derivative of Hossein’s 50 percent partnership interest”].)

In sum, the FAC failed to allege that Hossein, Fouladi, or any court ever transferred any transferrable interests in the Hossein-Fouladi partnership to Mahmoud. That is, Fouladi was not an alleged transferor and Mahmoud was not an alleged transferee. Because Mahmoud alleged no right to receive distributions to which Hossein would otherwise be entitled, Mahmoud failed to allege facts sufficient to support a cause of action against Fouladi under Corporations Code section 16503. Thus, the trial court properly sustained Fouladi’s demurrer as to this cause of action.

Mahmoud argues Fouladi can be held liable under an aiding and abetting theory. We disagree. Fouladi could not have aided and abetted Hossein in withholding partnership distributions because Mahmoud did not allege that he is a transferee who is entitled to receive any partnership distributions.

Mahmoud also argues that the judgment in Abassi I, supra, G051593, “is binding on the defendants based on res judicata and collateral estoppel.” (Boldfacing and underlining omitted.) We disagree. Under the doctrine of res judicata (claim preclusion) a party is precluded from litigating an identical claim in a subsequent proceeding. (Takahashi v. Board of Education (1988) 202 Cal.App.3d 1464, 1473-1474.) Under the doctrine of collateral estoppel (issue preclusion) a party is precluded from litigating an identical issue in a subsequent proceeding. (Ibid.) Here, the alleged violation of Corporations Code section 16503 (as well as all of the other causes of action alleged in the FAC), were not litigated in the prior proceeding. Thus, the doctrines of res judicata and collateral estoppel are not applicable.

2. Breach of Fiduciary Duty

“‘The elements of a cause of action for breach of fiduciary duty are: (1) the existence of a fiduciary duty; (2) the breach of that duty; and (3) damage proximately caused by that breach.’” (IIG Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 645-646.) A fiduciary duty arises when it is either imposed by law, such as between a trustee and beneficiary, by agreement, or when one party places confidence in another party’s integrity and the latter voluntarily accepts or assumes the confidence. (GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc. (2000) 83 Cal.App.4th 409, 416-417; Everest Investors 8 v. McNeil Partners (2003) 114 Cal.App.4th 411, 424 [a partnership imposes a fiduciary relationship].)

It is well established in California law that a party may be held liable for aiding and abetting tortious conduct. (Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1144.) “California’s law on subjecting a defendant to liability for aiding and abetting a tort arises from common law. ‘“Liability may . . . be imposed on one who aids and abets the commission of an intentional tort if the person . . . knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act . . . .”’” (IIG Wireless, Inc. v. Yi, supra, 22 Cal.App.5th at pp. 653-654.) “‘“‘[A]iding-abetting focuses on whether a defendant knowingly gave ‘substantial assistance’ to someone who performed wrongful conduct, not on whether the defendant agreed to join the wrongful conduct.’”’” (Ibid.)

A plaintiff can sue a defendant for aiding and abetting a breach of a fiduciary duty, even though the defendant owed no fiduciary duty to the plaintiff. (American Master Lease, LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1476.) In Idanta, an investment company sued a defendant investment company for breach of a fiduciary duty as an aider and abettor. (Id. at pp. 1459-1471.) On appeal, the defendant argued it could not be held liable for aiding and abetting a fiduciary duty by the principal because defendant did not independently owe a fiduciary duty to plaintiff. (Id. at p. 1458.) The Court of Appeal disagreed: “‘The aider and abettor’s conduct need not . . . constitute a breach of [a fiduciary] duty.’” (Id at p. 1476.) Relying on a long line of precedential cases, the court explained that liability arises “when the aider and abettor makes ‘“a conscious decision to participate in tortious activity for the purpose of assisting another in performing a wrongful act.”’” (Id. at p. 1477.)

Here, Mahmoud alleged in the FAC that Fouladi issued fraudulent tax returns and committed other acts of financial malfeasance. Mahmoud further alleged that these alleged acts by Fouladi deprived Mahmoud of his derivative share of the Hossein-Fouladi partnership profits. Although Fouladi owed no independent fiduciary duty to Mahmoud, the alleged facts—that we must assume to be true in this de novo review—tend to show that Fouladi knowingly gave substantial assistance to Hossein, who had a position of trust (and therefore owed a fiduciary duty) to his uncle Mahmoud. Therefore, the FAC pleaded sufficient facts to show that Fouladi may be held liable for breaching Hossein’s fiduciary duty to Mahmoud under an aiding and abetting legal theory. Thus, the trial court improperly sustained Fouladi’s demurrer as to this cause of action.

3. Constructive Fraud

““‘Constructive fraud is a unique species of fraud applicable only to a fiduciary or confidential relationship.” [Citation.] [¶] “[A]s a general principle constructive fraud comprises any act, omission or concealment involving a breach of legal or equitable duty, trust or confidence which results in damage to another even though the conduct is not otherwise fraudulent. Most acts by an agent in breach of his fiduciary duties constitute constructive fraud. The failure of the fiduciary to disclose a material fact . . . may constitute constructive fraud. Also, a careless misstatement may constitute constructive fraud even though there is no fraudulent intent.”’” (Assilzadeh v. California Federal Bank (2000) 82 Cal.App.4th 399, 415.)

Legal responsibility “may ‘“be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.”’” (Richard B. LeVine, Inc. v. Higahsi (2005) 131 Cal.App.4th 566, 579.)

Here, Mahmoud alleged in the FAC that he and his nephew Hossein were in a special relationship giving rise to a fiduciary duty. Mahmoud further alleged: “[Hossein and Fouladi] actively provided [Mahmoud] with annual federal tax returns representing that they were true and accurate. In fact, they were false and fraudulent.” (Italics omitted.) Mahmoud further alleged that Hossein and Fouladi “carried out [the alleged fraudulent accounting] with the wrongful intention of inflicting serious financial damage upon [Mahmoud].” In short, Mahmoud pleaded each element of a constructive fraud cause of action in the FAC under an aiding and abetting legal theory as to Fouladi. Thus, the trial court improperly sustained Fouladi’s demurrer as to this cause of action.

4. Fraudulent Concealment

“The required elements for fraudulent concealment are: (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606.)

Here, Mahmoud alleged in the FAC that Hossein and Fouladi failed to disclose “all annual draws and distributions” that they received from the operations of the two Laguna Beach restaurants and Mahmoud was unaware of those facts. Further, Mohammed alleged that Hossein and Fouladi’s “intent at all times was to deceive [Mahmoud] and to conceal the fact that he was owed substantial annual distributions from” the restaurants. Fraudulent concealment is an intentional tort. (See Monarch v. Southern Pacific Transportation Co. (1999) 70 Cal.App.4th 1197, 1209.) Fouladi may be held liable as an aider and abettor for the alleged tortious conduct as pleaded in the FAC. (See Richard B. LeVine, Inc. v. Higahsi, supra, 131 Cal.App.4th at p. 579.) Thus, the trial court improperly sustained Fouladi’s demurrer as to this cause of action.

5. Constructive Trust

“‘A constructive trust is . . . created by operation of law as a remedy to compel the transfer of property from the person wrongfully holding it to the rightful owner. [Citations.] The essence of the theory . . . is to prevent unjust enrichment and to prevent a person from taking advantage of his or her own wrongdoing.’” (Campbell v. Superior Court (2005) 132 Cal.App.4th 904, 920, italics added.)

A “cause of action” is: “The fact or facts which give a person a right to judicial redress or relief against another.” (Black’s Law Dict. (6th ed. 1990) p. 221, col. 2.) A “remedy” is: “The rights given to a party by law or by contract which that party may exercise upon a default by the other contracting party, or upon the commission of a wrong (a tort) by another party.” (Black’s Law Dict. (6th ed. 1990) p. 1294, col. 1.) A constructive trust is not a cause of action; a constructive trust is a remedy. (See Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 277, fn. 4.)

Here, Mahmoud pleaded a purported constructive trust as one of his seven causes of action. Because a constructive trust is not, in fact, a cause of action, the trial court properly sustained Fouladi’s demurrer without leave to amend (that is, no amendment by Mahmoud could possibly cure the defect).

6. Accounting

Equitable principles govern an accounting, and the plaintiff must show the legal remedy is inadequate. (Green Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th 425, 442-443.) “A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting. [Citations.] [¶] An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.)

Here, Mahmoud alleges that Hossein and Fouladi engaged in fraudulent accounting practices from 2006 to the date of the filing of the FAC. He further alleges “general and special damages” according to proof, “but no less than $1,000,000.00.” Because there is a fiduciary relationship between Mahmoud and Hossein, and the recovery of sums would presumably require an accounting of the Hossein/Fouladi partnership, an accounting is equitably alleged. Thus, the trial court improperly sustained Fouladi’s demurrer as to this cause of action.

7. Financial Elder Abuse (Welfare and Institutions Code 15600 et seq.)

“(a) ‘Financial abuse’ of an elder or dependent adult occurs when a person or entity does any of the following: [¶] (1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. [¶] (2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder . . . for a wrongful use or with intent to defraud, or both.” (Welf. & Inst. Code, § 15610.30, subd. (a), italics added.) A person that engages in such conduct is deemed to have acted for a wrongful purpose. (Welf. & Inst. Code, § 15610.30, subd. (b).)

Liability for assisting financial elder abuse is coextensive with the common law liability for aiding and abetting an intentional tort. (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 744-745.) A showing of physical harm is not required to support a plaintiff’s claim for financial elder abuse under California law; rather a showing of financial abuse is sufficient. (See, e.g., Strawn v. Morris, Polich & Purdy, LLP (2019) 30 Cal.App.5th 1087, 1102 [“An insurer’s bad faith denial of a claim can support a cause of action for financial elder abuse”].)

Here, Mahmoud alleged that he “was 65 years of age or older at the time of the fraudulent acts.” Mahmoud further alleged that: “[Hossein and Fouladi] and each of them misappropriated, hid and/or wrongfully retained sums owed to [Mahmoud] from the [restaurant partnership].” Finally, Mahmoud alleged that: “[Hossein and Fouladi’s] fraudulent acts of hiding, misappropriating and stealing [Mahmoud’s] distributions was done with the intent to defraud.” In sum, Mahmoud alleged facts in the FAC sufficient to establish each element of the financial elder abuse cause of action under an “assisting,” or aiding and abetting legal theory. (See Welf. & Inst. Code, § 15610.30, subd. (a)(2).) Thus, the trial court improperly sustained Fouladi’s demurrer as to this cause of action.

C. Leave to Amend

Mahmoud argues that the trial court abused its discretion by not allowing him leave to amend the FAC. We disagree. Mahmoud has failed to provide an adequate record to establish an alleged abuse of discretion by the court.

When a demurrer is sustained without leave to amend, we generally decide whether a reasonable possibility exists that amendment by the plaintiff may cure the defect. (Rakestraw v. California Physicians’ Service, supra, 81 Cal.App.4th at p. 43.) However, granting a demurrer without leave to amend is a matter of discretion by the trial court; therefore, it is the appellant’s burden to “to provide an adequate record to assess error.” (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295.)

In an appeal, “judgments and orders are presumed correct, and error must be affirmatively shown.” (Hernandez v. California Hospital Medical Center (2000) 78 Cal.App.4th 498, 502.) To the extent the record is inadequate, we make all reasonable inferences in favor of the judgment. (Maria P. v. Riles, supra, 43 Cal.3d at p. 1295.) That is, where the appellant fails to provide an adequate record, we must presume that the appealed judgment or order is correct. (See Ibid.)

Here, the record on appeal does not contain any transcripts—or any other records—showing that Mahmoud made any effort to demonstrate to the trial court that the FAC could be amended. Thus, we affirm the trial court’s granting of Fouladi’s demurrer without leave to amend the transfer of assets cause of action (Corp. Code, § 16503), which we found that the court properly sustained. And again, as to the purported constructive trust cause of action, an amendment could not conceivably cure the defect because a constructive trust is not a cause of action.

 

III

DISPOSITION

The trial court’s judgment is affirmed in part and reversed in part. The court’s sustaining of Fouladi’s demurrers as to the transfer of assets cause of action and the purported constructive trust cause of action are affirmed. The court’s sustaining of Fouladi’s demurrers as to the five remaining causes of action are reversed.

In the interests of justice, each side will bear its own costs on appeal. (See Cal. Rules of Court, rule 8.278(a)(5).)

MOORE, ACTING P. J.

WE CONCUR:

GOETHALS, J.

DUNNING, J.*

* Retired Judge of the Orange Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.