Case Number: BC479045 Hearing Date: February 08, 2018 Dept: 47

Ana Vaca , et al. v. Neil M. Howard, Sheldon Lewenfus et al.

MOTION FOR SUMMARY JUDGMENT

MOVING PARTY: Defendant Sheldon Lewenfus

RESPONDING PARTY(S): Plaintiffs Ana Vaca and German Valera, as Husband and Wife

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Ana Vaca and her husband German Valera allege that in a case entitled Vaca v. Vaca, the court awarded Vaca’s brother, Enrique Vaca, a judgment against her in the sum of $158,565.89. Enrique Vaca represented to his attorney Howard that he did not want to sell his mother’s house to satisfy the judgment. However, defendant Howard allegedly falsely represented to the Court that he needed a court order to sell the house in order to satisfy the judgment. Defendants Howard, Lewenfus and Garrard allegedly conspired to deprived Plaintiffs of their property by selling it at public auction to Lewenfus for $10,000.

Defendant Sheldon Lewenfus moves for summary judgment.

TENTATIVE RULING:

Defendant Sheldon Lewenfus’s motion for summary judgment is DENIED.

DISCUSSION:

Request For Judicial Notice

Defendant’s request that the Court take judicial notice of court documents regarding Enrique Vaca, et al. v. Ana Vaca, LASC Case NO. GC041483; Ana Vaca v. Neil M. Howard, et al., LASC BC436404; Sheldon Lewenfus v. Ana Vaca, LASC Case No. 10U02037; In re Ana Vaca, U.S. Bankruptcy Court, Central District of California, Case No. 2:10-bk-0490-RN; this action, Vaca, et al. v. Howard, et al., LASC Case No. BC479045; and the Second District Court of Appeal Opinion, Appellate Case No. B256065 is GRANTED per Evid. Code § 452(d)(court records).

Defendant’s supplemental request for judicial notice of orders regarding related cases BC436404 and BC479045 is GRANTED. Evid. Code § 452(d)(court records).

Defendant’s Evidentiary Objections

Pursuant to CCP § 437c(q), the Court only rules upon evidentiary objections asserted against evidence which the Court deems to be material to the disposition of this action.

No. 16: SUSTAINED. Misstates the testimony; lack of foundation.

Motion For Summary Judgment

Defendant Sheldon Lewenfus moves for summary judgment as to the 4AC, which asserts a single remaining cause of action for conspiracy to defraud against Defendant Lewenfus.

1. Issue No. 1: “No Triable Issue of Material Fact Exists That the Second Cause of Action For Conspiracy to Defraud Fails as a Matter of Law.”

The 4AC alleges at ¶ 78 that Defendants Howard, Lewenfus and Garrard were co-conspirators to misappropriate the subject property. However, as pointed out by Defendant, co-Defendant Garrard was dismissed from this case by the sustaining of her demurrer to the first through fourth causes of action without leave to amend on August 2, 2017. UF No. 18; RJN, Exhs. 26, 27.

Moreover, as pointed out by Defendant, on September 26, 2017, the Court granted co-Defendant Howard’s motion for summary judgment judgment because Plaintiff failed to disclose her claims against Defendant Howard in the bankruptcy schedule. UF Nos. 17, 19; RJN Exhs. 7, 28, 29, 30, 31, 2. In so ruling, the Court noted in its Final Ruling that, as of February 24, 2011, Plaintiff Vaca had been evicted from the subject property. This was a month before the bankruptcy court granted the discharge on March 24, 2011. As of the date Plaintiff was evicted, she would have known that the property was sold at a Sheriff’s sale by attorney Howard—and thus she had a claim against him for dispossessing her of the property. The fact that Plaintiff may have subsequently developed the theory that Howard was working in concert with Lewenfus and Garrard does not excuse her failure to list the known claim against Howard. Yet, as the arbitrator found, Plaintiff did not schedule any claim against Defendant Howard. This Court noted that Plaintiff did not do so, even though she had an opportunity to amend her bankruptcy schedule pre-discharge once she was aware of the claim against Howard based on the completion of the sale of the real property. This sale of real property is the basis of the instant lawsuit. The failure to list potential legal claims in bankruptcy schedules where the underlying facts justifying the claim are known bars litigation of such claims on the ground of res judicata and estoppel. Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1606-09, 1614

The confirmation of the arbitration award was affirmed by the Court of Appeal by way of its opinion dated October 29, 2015. As such, the arbitrator’s decision that Plaintiff Vaca is judicially estopped from asserting her claims against Defendant Howard includes her claim in the instant lawsuit for misappropriation of Plaintiffs’ property. The arbitrator’s order granting summary judgment has res judicata effect. Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 407.

The court also found that Plaintiff German Valera is in privity with Vaca for purposes of the res judicata effect of the arbitrator’s order. Mueller v. J. C. Penney Co. (1985) 173 Cal.App.3d 713, 723.

Thus, because Plaintiffs’ claims against both co-Defendants Garrard and Lewenfus are barred, there are no co-conspirators with whom Defendant Lewenfus can be held liable for conspiracy to defraud.

Civil conspiracy is not an independent tort. Instead, it is “a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or [*212] design in its perpetration. [Citation.] By participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy. [Citation.] In this way, a coconspirator incurs tort liability co-equal with the immediate tortfeasors.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510–511 [28 Cal. Rptr. 2d 475, 869 P.2d 454].) The elements of a civil conspiracy are (1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages. (Ibid.) . . .

City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211-12 (bold emphasis added).

Liability based on an aiding and abetting or conspiracy theory is also “derivative,” i.e., liability is imposed on one person for the direct acts of another. “Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. [Citation.] By participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510–511 [28 Cal. Rptr. 2d 475, 869 P.2d 454], italics added.) . . .

. . . It would be anomalous to hold Higashi liable for conspiring to commit a tort, or for aiding and abetting its commission, where plaintiff has already asserted those rights against the direct tortfeasor, the claim was adjudicated, and it was determined plaintiff’s rights were not violated. . . .

Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 579.

As such, Defendant Lewenfus has met his initial burden of demonstrating that he is entitled to judgment as to the sole remaining cause of action asserted against him. The burden shifts to Plaintiffs to cite evidence sufficient to raise a triable issue of material fact.

In their opposing statement of additional facts, Plaintiffs cite evidence that Defendant Lewenfus personally engaged in tortious acts, such that there is no need to resort to conspiracy liability to find him liable:

“[T]he only significance of the conspiracy charge is that each member may be held responsible as a joint tortfeasor, regardless of whether or not he directly participated in the act.” (5 Witkin, supra, Torts, § 44, p. 107.) Thus, under the civil conspiracy claim, we will consider whether Higashi can be held liable for the acts of the alleged coconspirators, the OCHI partners. Whether Higashi can be liable for his direct acts will be considered on our review of the professional negligence claim.

Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 574 (bold emphasis and italics added).

Plaintiffs’ Additional Fact No. 15 is that, on September 1, 2010, Defendant Lewenfus himself filled out a form called “Service Ticket” stating: “Purchaser’s Name: Sheldon Lewenfus, c/o Neil Howard, 2800 28th Street #151, Santa Monica, CA 90405, Phone: (310) 452-6800.” The address and telephone number belong to Howard. According to Plaintiffs, Garrard testified that this form is filled out after the sale is concluded and Lewenfus requested the purchaser’s name to appear as “Sheldon Lewenfus c/o Neil Howard.” Alden Decl., ¶ 17; Pltf’s Exh. L; Garrad Depo. (Pltf’s Exh. K), 87:11-23. However, as objected to by Defendant, Garrard’s deposition testimony cited by Plaintiffs did not indicate that Defendant Lewenfus himself filled out the service ticket and that Lewenfus requested that the purchaser’s name appear as “Sheldon Lewenfus c/o Neil Howard. Also, as objected to by Defendant, Exhibit L pertains to the September 1, 2010 sale which did not go forward. This, this evidence turns out to be irrelevant.

Nonetheless, Plaintiff’s AF No. 16 is that at the November 2010 sale, Howard instructed Garrard to use Enrique’s credit judgment to pay the $10,000 purchase price by Lewenfus. Pltf’s Exh. K, Garrard Depo, Page 22-25, 29:6-24. AF No. 24; Alden Decl., ¶ 26; Pltf’s Exhs. R.

Garrard caused to be published in a newspaper the sale of the Subject Property to take place “on November 3, 2010, at 10:00 a.m.,” at “Stanley Mosk County Courthouse, 111 N. Hill Street, Room 125B, Los Angeles, CA 90012.” AF No. 21; Alden Decl., ¶ 25; Exh. P.

On March 30, 2012, Defendant Lewenfus filed a declaration in support of his motion to expunge the lis pendens, declaring under penalty of perjury at ¶ 2:

In or about early November 2010, I purchased the real property located at 3419 Vineland Avenue, Baldwin Park, California 1706, Assessor Parcel No. 8554-026-006 . . . at a sheriffs sale which was publicly conducted at the steps of the Los Angeles Superior Court, Pasadena Courthouse, located at 300 East Walnut Avenue, Pasadena, California 91101.

Lewenfus was the only bidder at the Sheriff’s Sale of November 3, 2010.

AF No. 22; Alden Decl., ¶ 24; Garrard Depo. at 22-25, 102-104; Pltf’s Exh. K; Exh. Q.

On November 12, 2010, Garrard issued a Sheriff’s Deed transferring the property to Lewenfus. AF No. 25; Alden Decl. ¶ 27; Pltf’s Exh. S. Thereafter, Lewenfus filed an unlawful detainer action, obtained a judgment and evicted all occupants of the property. AF No. 26; Alden Decl., ¶ 28. On April 16, 2013, after the Court granted Lewenfus’ anti-SLAPP motion and dismissed him from the case, Lewenfus sold the subject property to Antonio and Bertha Sanchez for $450,000.00. AF No. 29; Plft’s Exh. W.

The foregoing evidence raises a triable issue of material fact, in that a jury could find from the foregoing evidence that Defendant Lewenfus knew that an opportunity would be presented by Howard and Garrard to obtain, as purchaser, the subject property for $10,000 as the only bidder at a public auction because the sale would be published to take place at Stanley Mosk Courthouse, but actually take place at the Pasadena Courthouse. A jury could find that Lewenfus acquired the subject property for such a low price so he could turn around and sell it for a more than $400,000 profit, which he did soon after the Court granted his anti-SLAPP motion on February 7, 2013 (which ruling the Court of Appeal reversed). Lewenfus’ liability would be direct, based on his own acts of accepting title to the subject property, knowing the sale price was fraudulently suppressed, then turning around and selling it. Such liability would exist independent of any derivative conspiracy liability for the torts of Howard and/or Garrard. The damages which Plaintiffs suffered are not speculative, as Defendant argues, but is quite obviously the loss of their real property as a result of the Sheriff’s sale. Defendants argument that there is no guarantee that any specific amount of money would have resulted from the bidding process such that Plaintiffs would have retained the property ignores Plaintiffs’ allegation in the 4AC that Enrique Vaca—judgment creditor as against Plaintiff Ana Vaca—informed Defendant Howard that he did not wish to sell his sister, Ana Vaca’s home. 4AC, ¶ 13. Yet, Howard took steps to proceed with the sale anyway. 4AC, ¶ 14. In other words, under Plaintiffs’ theory, Howard should never have proceeded with the sale against his client, Enrique Vaca’s, wishes.

The foregoing is consistent with the Court of Appeal’s opinion that the gravamen of Plaintiffs’ claim is the alleged fraudulent suppression of bids at a court-authorized sale. Court of Appeal Opinion, Page 2. The Court of Appeal indicated the gist of Plaintiffs’ claims against Defendants Howard and Lewenfus is that they conspired to suppress all other bids at the Sheriff’s sale of the subject real property, thus enabling Lewenfus to acquire the residence at a grossly inadequate price. Court of Appeal Opinion at Page 10. The Court of Appeal expressly opined that “[a]lthough the titles of some causes of action—such as conversion, conspiracy to convert—do not apply to the fraudulent taking of real property, the allegations are sufficient to allege a theory of misappropriation[1].” Court of Appeal Opinion at Page 12 (bold emphasis and underlining added). “[T]he gravamen of the complaint attacks the fraudulent suppression of bids, particularly by the judgment creditor, in order to facilitate the pre-arranged sale to Lewenfus for an inadequate price. We conclude that the conduct at issue, the fraudulent suppression of bids at a sheriff’s sale, does not arise from protected petitioning activities.[2]” Id. (Bold emphasis added.) Implicit in the Court of Appeal’s decision is that the fraudulent suppression of bids was designed to enable Defendants to acquire the subject property at such a low price that it was tantamount to stealing it from Plaintiffs Ana Vaca and German Valera. “[I]nferentially, everyone has a duty to refrain from committing intentionally tortious conduct against another’ . . . The general duty is not to warn of the intent to commit wrongful acts, but to refrain from committing them.” Bank of America Corp. v. Superior Court (2011) 198 Cal.App.4th 862, 871.

Defendant’s argument that the doctrines of res judicata and collateral estoppel and the primary right theory bar Plaintiffs’ claim as a matter of law is not persuasive. Defendant’s argument is based on this Court granting Defendant Howard’s motion for summary judgment on September 26, 2017 and sustaining Defendant Garrard’s demurrer without leave to amend on August 2, 2017—both of which occurred in this case. However, the doctrines of res judicata, collateral estoppel and the primary right theory (i.e., the rule against splitting a cause of action), apply to separate/earlier litigation as to which a final judgment on the merits has been obtained:

The doctrines of res judicata and collateral estoppel apply to later litigation to give conclusive effect to a former judgment or an issue determined in a former proceeding. (7 Witkin, Cal. Procedure, supra, Judgment, §§ 280, 354, pp. 820, 915.)

Our decision in Griset I, once it became final, terminated this litigation as to all causes of action in plaintiffs’ complaint. Because plaintiffs thereafter did not commence a separate lawsuit, but instead improperly sought to revive this litigation after its final conclusion, there was no pending legal proceeding to which the above mentioned doctrines or their exceptions properly could be applied. And because Griset I resulted in affirmance of the trial court’s final judgment in this proceeding, the Court of Appeal erred in holding that it had authority to entertain a second appeal in the same action concerning the merits of plaintiffs’ causes of action.

Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 701-702 (bold emphasis added).

[I]n California the rule is that the finality required to invoke the preclusive bar of res judicata is not achieved until an appeal from the trial court judgment has been exhausted or the time to appeal has expired. (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal. 3d 903, 910-911 [226 Cal. Rptr. 558, 718 P.2d 920].) For res judicata purposes, the judgment sought to be invoked in bar must be ” ‘the “last word” of the rendering court–a “final” judgment.’ ” (Sandoval v. Superior Court (1983) 140 Cal. App. 3d 932, 936 [190 Cal. Rptr. 29], italics omitted; see also Rest.2d Judgments, § 13, com. a, p. 132 [for finality purposes “the judgment must ordinarily be a firm and stable one . . . .”].)

Franklin & Franklin v. 7-Eleven Owners for Fair Franchising (2000) 85 Cal.App.4th 1168, 1174.

Collateral estoppel will bar unnecessary relitigation of issues under the following circumstances: (1) the issue previously decided must be identical to the one sought to be relitigated; (2) the party to be estopped must have been a party or privy of a party in the prior suit; and (3) that suit must have resulted in a final judgment on the merits. (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal. 3d 903, 910 [226 Cal. Rptr. 558, 718 P.2d 920].)

The liability verdicts in McLaughlin, on the assigned causes of action as well as the statutory cause, were bootstrapped into Abelson under a collateral estoppel concept while the McLaughlin judgment was on appeal. But according to California law, a judgment is not final for purposes of collateral estoppel while open to direct attack, e.g., by appeal. ( National Union Fire Ins. Co. v. Stites Prof. Law Corp. (1991) 235 Cal. App. 3d 1718, 1726; [1 Cal. Rptr. 2d 570]; Long Beach Unified Sch. Dist. v. State of California (1990) 225 Cal. App. 3d 155, 169 [275 Cal. Rptr. 449]; Sandoval v. Superior Court (1983) 140 Cal. App. 3d 932, 936-937 [190 Cal. Rptr. 29].)

Abelson v. National Union Fire Ins. Co. (1994) 28 Cal.App.4th 776, 787.

California courts apply the “ ‘ “primary rights” theory’ ” to “determine whether two proceedings involve identical causes of action for purposes of claim preclusion.” (Boeken, supra, 48 Cal.4th at p. 797, citation omitted.) “For purposes of res judicata, a cause of action consists of the plaintiff’s primary right to be free from a particular injury, the defendant’s corresponding primary duty and the defendant’s wrongful act in breach of that duty. [Citation.] The violation of a primary right gives rise to only a single cause of action. [Citation.]” (Bullock, supra, 198 Cal.App.4th at p. 557.)

“ ‘ “[T]he ‘cause of action’ is based upon the harm suffered, as opposed to the particular theory asserted by the litigant. [Citation.] Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief. ‘Hence a judgment for the defendant is a bar to a subsequent action by the plaintiff based on the same injury to the same right, even though he presents a different legal ground for relief.’ [Citations.]” Thus, under the primary rights theory, the determinative factor is the harm suffered. When two actions involving the same parties seek compensation for the same harm, they generally involve the same primary right. [Citation.]’” (Bullock, supra, 198 Cal.App.4th at p. 557, quoting Boeken, supra, 48 Cal.4th at p. 798.)

Federal Home Loan Bank of San Francisco v. Countrywide Financial Corp. (2013) 214 Cal.App.4th 1520, 1530-31.

Moreover, the arbitrator’s decision regarding Plaintiff Vaca failing to schedule any claim against Howard in her bankruptcy proceeding would not have preclusive effect against Defendant Lewenfus because Plaintiff Vaca had no reason to know of any claim against Lewenfus at that time which she had failed to disclose.

For the foregoing reasons the motion for summary judgment is DENIED.

Moving Party to give notice, unless waived.

IT IS SO ORDERED.

Dated: February 8, 2018 ___________________________________

Randolph M. Hammock

Judge of the Superior Court