Chase Investment Services Corp. v. Law Offices of Jon Divens & Associates, LLC , 491 F. App'x 793 ( 2012 )

FILED
NOT FOR PUBLICATION AUG 06 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHASE INVESTMENT SERVICES No. 10-56785
CORP.,
D.C. No. 2:09-cv-09152-SVW-
Plaintiff - Appellee, MAN
BETTS AND GAMBLES
INVESTMENTS, INC.; et al. MEMORANDUM*
Defendants - Appellees,
AMEDRAA, LLC,
Defendant-cross-claimant-Appellee,
v.
LAW OFFICES OF JON DIVENS &
ASSOCIATES, LLC, et al.
Defendant cross-claimant -
Appellant.
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted July 10, 2012
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Pasadena, California
Before: TALLMAN and N.R. SMITH, Circuit Judges, and BENSON, District
Judge.**
Plaintiff-in-Interpleader Chase Investment Services Corp. (“Plaintiff” or
“CISC”) filed this interpleader action against, in part, (1) Jon Divens (“Divens”),
(2) the Law Offices of Jon Divens & Associates, LLC (“JDA”), (3) Betts and
Gamble Investments, Inc. and Betts and Gambles Global Equities, LLC
(collectively “Betts”), and (4) Amedraa, LLC (“Amedraa”). These Defendants-in-
Interpleader asserted, in part, conflicting claims to the interest earned on two of the
collateralized mortgage obligations (“CMOs”) in a CISC securities brokerage
account (“the Account” or “the CISC account”). The district court held a bench
trial and awarded the interest earned on the CMOs to Betts and Amedraa. The
district court found Divens’s testimony to be “wholly incredible” and that “Divens
created a scheme to defraud [Betts] and Amedraa and to steal their assets.” Chase
Inv. Services Corp. v. Law Offices of Jon Divens & Associates, LLC, 748 F. Supp.
2d 1145, 1151 (C.D. Cal. 2010).
**
The Honorable Dee V. Benson, District Judge for the U.S. District
Court for Utah, sitting by designation.
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In this appeal, Divens and JDA (together, “Divens”) take issue with the
district court’s credibility determinations, three of its findings of fact, and three of
its conclusions of law. Jurisdiction is proper under 28 U.S.C. § 1291. We affirm.
1. Divens argues that the district court’s witness credibility determinations
should be reviewed pursuant to a substantial evidence standard. This argument
fails. A district court’s credibility determinations are reviewed for clear error and
entitled to special deference. Anderson v. Bessemer City, 470 U.S. 564, 573
(1985); Beech Aircraft Corp. v. U.S., 51 F.3d 834, 838 (9th Cir. 1995). The
district court did not clearly err when it determined that the testimony of Jon
Divens was “wholly incredible” and the testimony of James Savor was “credible”
and “corroborated by the exhibits admitted at trial.” Chase Inv. Services Corp.,
748 F. Supp. 2d at 1151.
2. Divens argues that the district court clearly erred when it found that
Divens did not have any agreement with any representative or agent of Betts or
Amedraa that entitled Divens or JDA to the interest generated by the CMOs. A
district court’s findings of fact are reviewed for clear error. Fed. R. Civ. P. 52(a);
Purcell v. Gonzalez, 549 U.S. 1,5 (2006); Navajo Nation v. U.S. Forest Service,
535 F.3d 1058, 1067 (9th Cir. 2008). The record in this case adequately supports
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the district court’s findings of fact that no such agreement existed. The findings
are not clearly erroneous.
3. Divens argues that the district court erred when it found that Divens
acquired the CMOs by falsely promising to act solely as an escrow agent and that
he absconded with the CMOs and stole their interest. The district court’s findings
of fact are not clearly erroneous, see Fed. R. Civ. P. 52(a); Purcell, 549 U.S. at 5;
Navajo Nation, 535 F.3d at 1067, and this argument also fails.
4. Divens argues that the district court also erred when it found that Divens
created a scheme to defraud Betts and Amedraa and to steal their assets because (1)
Divens was authorized to place the CMOs in trading by both written and oral
agreements; (2) Divens and Wilde contested Savor’s allegations that they were not
authorized to move the CMOs; and (3) Divens was diligent in attempting to place
the CMOs in trading. But Divens has pointed to no evidence in the record showing
that the district court’s finding was clearly erroneous, see Fed. R. Civ. P. 52(a);
Purcell, 549 U.S. at 5; Navajo Nation, 535 F.3d at 1067, and we therefore reject
Divens’s argument to the contrary.
5. Divens argues that the district court erred when it concluded that JDA is
not entitled to the interest on the CMOs under the theory of quantum meruit.
Quantum meruit is a theory of recovery where the law implies a promise to pay for
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services, under circumstances showing that the services were not gratuitously
rendered. Huskinson & Brown, LLP v. Wolf, 9 Cal. Rptr. 3d 693, 696 (Cal. 2004).
A district court’s conclusions of law are reviewed de novo, however, factual
findings therein are reviewed for clear error. Husain v. Olympic Airways, 316 F.3d
829, 835 (9th Cir. 2002).
Because Divens’s trial testimony is incredible, the record evidence relied on
by Divens provides no support for his argument. Additionally, the California
Supreme Court did not create an exception to the benefit rule where the
performance of services have not been actually rendered. Earhart, 25 Cal.3d at
515. Divens also failed to meet his burden under quantum meruit of showing the
reasonable value of his alleged services rendered. Miller v. Campbell, Warburton,
Fitzsimmons, Smith, Mendel & Pastore, 76 Cal. Rptr. 3d 649, 661 (Cal. Ct. App.
2008). Therefore, the district court’s conclusion that JDA is not entitled to the
interest on the CMOs under the theory of quantum meruit is not erroneous.
6. Under California's Commercial Code, adverse claims to a financial asset
may not be asserted against a person who acquires a security entitlement (1) for
value and (2) without notice of the adverse claim. Cal. Com. Code § 8502. Divens
argues that the district court erred when it concluded that JDA does not satisfy the
value prong of Section 8502. This argument fails. With respect to the Cobalt
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CMO, because the district court did not clearly err when it found that the attempted
trading was never authorized, agreed to, or otherwise bargained for by Betts, the
district court’s conclusion that neither Divens nor JDA provided any value in
exchange for the interest payments on the Cobalt CMO is correct. See Husain, 316
F.3d at 835. With respect to the FNMA Series CMO, because Divens’s testimony
was found incredible while James Savor’s testimony was found credible, the
district court’s conclusion that JDA did not provide any value in exchange for the
interest payment earned on the FNMA Series CMO is not erroneous. See id.Therefore, the district court’s conclusion that JDA does not satisfy the value prong
of California Commercial Code § 8502 is proper.
Even if value was provided in exchange for interest payments on the CMO,
the district court did not err in determining that Divens and JDA had notice of
adverse claims under California Commercial Code § 8102(1). The district court’s
findings, however, are supported by the record and Divens has not pointed to any
evidence giving rise to a “definite and firm conviction that a mistake has been
made.” Husain, 316 F.3d at 835 (internal quotations omitted). Therefore, the
district court’s conclusion that JDA had notice of Betts’s and Amedraa’s adverse
claims under California Commercial Code § 8102(1) was correct.
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7. Lastly, the district court did not err when it included the time period from
February 2009 to March 2009 in its award of damages because its holding is not
inconsistent with that award.
AFFIRMED.
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