Aghaian v. Minassian ( 2021 )

Filed 5/24/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
SEDA GALSTIAN AGHAIAN et al., B296287
Plaintiffs and Respondents, (Los Angeles County
Super. Ct. No. BC498691)
v.
SHAHEN MINASSIAN,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los
Angeles County. William MacLaughlin, Judge. Affirmed.
Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup and
Allison A. Arabian Hill; Joshua R. Furman Law Corporation and
Joshua R. Furman for Defendant and Appellant.
Horvitz & Levy LLP, Mitchell C. Tilner and Steven S.
Fleischman; Aldisert Law, Gregory J. Aldisert, Kinsella
Weitzman Iser Kump and David W. Swift for Plaintiffs and
Respondents.
_____________________________
Seda Galstian Aghaian and Aida Galstian Norhadian
(together, Plaintiffs) brought an action against Shahen
Minassian,1 alleging he improperly obtained money and property
from their deceased parents. Following a bench trial, the court
concluded Minassian was unjustly enriched and entered
judgment in Plaintiffs’ favor for more than $34 million. On
appeal, Minassian asserts the trial court should have granted his
inconvenient forum motion, Plaintiffs’ claims are barred by the
statute of limitations, the court erred by imposing discovery
sanctions, and Plaintiffs are barred from recovery because the
contract underlying their claims was illegal. We reject
Minassian’s arguments and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs’ father, Gagik Galstian, was a successful
businessman in Iran for many years. During that time, he and
Plaintiffs’ mother, Knarik Galstian, obtained significant real
estate holdings. The Galstians fled Iran in 1978 during the
unrest that led to the Iranian revolution.
In 1996, Gagik entered into a contract with Minassian—
who was a family friend—to try to reclaim some of his properties
in Iran. To effectuate the agreement, the Galstians executed
powers of attorney granting Minassian authority to act on their
behalf in reclaiming and selling the properties. Gagik and
Knarik died in 2012.
1 Minassian died while this appeal was pending. On his
motion, we substituted the special administrator of Minassian’s
estate as the appellant in this case. (See Cal. Rules of Court, rule
8.36(a).)
2
In January 2013, Plaintiffs filed a complaint against
Minassian, alleging he conspired with another individual to steal
their parents’ properties and defraud them out of tens of millions
of dollars. Plaintiffs brought their claims individually and as
trustees of their parents’ trust. Their operative complaint
asserted causes of action for unjust enrichment and money had
and received.
The case proceeded to a bench trial in 2017, after which the
court issued a 61-page statement of decision finding in Plaintiffs’
favor. The court summarized its conclusions as follows: “[B]y at
least 2006, with a few isolated exceptions, it appears that
Minassian began what was essentially an effort to acquire all of
the Galstian properties for himself and, in the instance of any
sale, to keep all, or some, of the money received for himself. In
order to accomplish this, he failed to advise the Galstians that he
had utilized the power of attorney he had been given by Galstian
to transfer title to nearly all of the real estate assets to himself,
failed to truthfully advise them of the status of the properties and
failed to account for sales from which he kept some or all of the
proceeds for himself. He has engaged in numerous transactions
which he has not described or explained even up to the present
time, often stating that he does not remember. He also has had
evidentiary sanctions imposed because of his failure to produce
documents and the net result of the purported lack of memory
and the failure to produce records substantially impacted the
court’s, and the Plaintiffs’, ability to reconstruct the events.
Whatever his intentions were when he and Galstian made their
agreement, he has deliberately and systematically taken
Plaintiffs’ property, and many proceeds therefrom, for himself on
numerous occasions.”
3
The court entered judgment in Plaintiffs’ favor for
$34,506,989 plus interest. Minassian appealed.
DISCUSSION
I. The Court Properly Denied Minassian’s Renewed
Inconvenient Forum Motion
Minassian contends the trial court erred in denying his
renewed motion to dismiss or stay based on inconvenient forum.
We disagree.
A. Background
After Plaintiffs filed their first amended complaint,
Minassian moved to dismiss or stay the action based on
inconvenient forum. He argued the Iranian civil court would
provide a suitable forum because the action concerned a dispute
among Iranian citizens over property located in Iran. Minassian
also represented that Plaintiffs had already participated in legal
proceedings against him in Iran involving the same claims. The
trial court stayed the action pursuant to Code of Civil Procedure
section 410.30, subdivision (a).2
Plaintiffs appealed and we reversed in Aghaian v.
Minassian (2015) 234 Cal.App.4th 427 (Aghaian I), holding Iran
is not a suitable alternative forum. We explained the “evidence is
overwhelming that Iranian courts discriminate against women
and non-Muslims. Among other things, Plaintiffs submitted
evidence that the testimony of a woman counts for half the value
of that of a man, and that women are not treated equally before
the courts, particularly in personal status matters relating to
marriage, divorce, inheritance, and child custody, and only men
can serve as judicial officers. . . . Two of the three Plaintiffs here
2 All further undesignated statutory references are to the
Code of Civil Procedure.
4
are women and the Galstian family members are not Muslim.
Leaving aside whether Iranian courts are independent or corrupt,
this is sufficient to show Iran is not a suitable alternative forum.
This is the ‘rare circumstance’ in which an alternative forum
‘provides no remedy at all.’ ” (Aghaian I, supra, 234 Cal.App.4th
at pp. 435–436.)
On remand, Minassian filed a “renewed” motion to dismiss
or stay based on inconvenient forum. He argued the motion was
warranted because, while the initial appeal was pending,
Plaintiffs filed a new civil lawsuit against him in Iran asserting
the same claims. In doing so, Minassian insisted, Plaintiffs
waived any argument that Iran is an inadequate forum.
Plaintiffs urged the court to deny Minassian’s motion on
multiple grounds, including under the law of the case doctrine.
Plaintiffs also represented that the Iranian action sought only to
quiet title to a subset of properties at issue in this case.
Moreover, unlike the present case, they did not seek
compensatory damages in Iran.
The court denied the renewed motion, explaining the “key
facts” underlying our decision in Aghaian I—that women and
non-Muslim parties are not afforded equal rights and due process
in Iranian courts—had not changed since Minassian’s first
motion. The court further pointed out that Minassian cited no
authority showing an unsuitable forum becomes suitable by
virtue of the plaintiff submitting to its jurisdiction.
B. Relevant Law
The doctrine of inconvenient forum (often referred to as
forum non conveniens) allows courts to “exercise their
discretionary power to decline to proceed in those causes of action
which they conclude, on satisfactory evidence, may be more
5
appropriately and justly tried elsewhere.” (Price v. Atchison, T. &
S. F. R. Co. (1954) 42 Cal.2d 577, 584.) The doctrine is codified in
two statutes—sections 418.10 and 410.30—which differ as to the
timing of the motion.
Minassian filed his motion under section 418.10, which
permits a defendant, “on or before the last day of his or her time
to plead,” to move to stay or dismiss the action on the ground of
inconvenient forum. (§ 418.10, subd. (a).) If the court denies the
motion, the defendant may file a petition for writ of mandate
challenging the order. (§ 418.10, subd. (c).) If the defendant does
so, the time to plead is extended until after the court rules on the
petition. (Ibid.)
A defendant who has already entered a general appearance
may file an inconvenient forum motion under section 410.30.
(Britton v. Dallas Airmotive, Inc. (2007) 153 Cal.App.4th 127,
134–135; Global Financial Distributors Inc. v. Superior Court
(2019) 35 Cal.App.5th 179, 192.) Section 410.30 provides:
“When a court upon motion of a party or its own motion finds
that in the interest of substantial justice an action should be
heard in a forum outside this state, the court shall stay or
dismiss the action in whole or in part on any conditions that may
be just.” (§ 410.30, subd. (a).)
“In determining whether to grant a motion based on forum
non conveniens, a court must first determine whether the
alternate forum is a ‘suitable’ place for trial.” (Stangvik v. Shiley
Inc. (1991) 54 Cal.3d 744, 751.) If the alternative forum is
suitable, the court then considers the private and public interests
in retaining the action for trial in California. (Ibid.) If the
private and public interests weigh in favor of a suitable
alternative forum, the trial court generally has discretion to
6
either dismiss or stay the action on any conditions that may be
just. (§ 410.30, subd. (a); see Laboratory Specialists Internat.,
Inc. v. Shimadzu Scientific Instruments, Inc. (2017) 17
Cal.App.5th 755, 764; Archibald v. Cinerama Hotels (1976) 15
Cal.3d 853, 857.) “The burden of proof is on the defendant, as the
party asserting forum non conveniens.” (Fox Factory, Inc. v.
Superior Court (2017) 11 Cal.App.5th 197, 204.)
C. Analysis
1. Minassian May Challenge the Order Denying
His Inconvenient Forum Motion
At the outset, Plaintiffs urge us to adopt a rule that an
order denying an inconvenient forum motion cannot be
challenged on appeal from a final judgment. We decline the
invitation.
“The right to appeal in California is generally governed by
the ‘one final judgment’ rule, under which most interlocutory
orders are not appealable.” (In re Baycol Cases I & II (2011) 51
Cal.4th 751, 754.) Such orders instead may be challenged on
appeal of the final judgment. (In re Marriage of Grimes & Mou
(2020) 45 Cal.App.5th 406, 418.)
There are, of course, exceptions to this rule. For example,
an order denying a motion to quash service for lack of personal
jurisdiction generally may not be challenged on appeal from a
final judgment. (McCorkle v. City of Los Angeles (1969) 70 Cal.2d
252, 258; State Farm General Ins. Co. v. JT’s Frames, Inc. (2010)
181 Cal.App.4th 429, 437 [“It has long been the rule in California
that a defendant who chooses to litigate the merits of a lawsuit
after its motion to quash has been denied has no right to raise
the jurisdictional question on appeal.”].)
7
Plaintiffs urge us to adopt a rule that a denial of an
inconvenient forum motion, like the denial of a motion to quash
for lack of personal jurisdiction, may not be challenged on appeal
of a final judgment. They contend such a rule makes sense
because section 418.10 governs both inconvenient forum motions
and motions to quash. That same statute, moreover, expressly
permits a defendant to file a writ petition to challenge an order
denying an inconvenient forum motion, which Plaintiffs insist
provides sufficient review. (§ 418.10, subd. (c).)
Plaintiffs also contend there are sound policy reasons for
such a rule. According to Plaintiffs, “[v]enue, like personal
jurisdiction, is a threshold issue that should be conclusively
decided at the outset of the litigation, so the parties and the court
need not go through an expensive and time-consuming trial only
to learn on appeal that the whole trial, even if free from
reversible error, must be repeated in a different court.”
We do not agree with Plaintiffs that an order denying an
inconvenient forum motion should be treated the same as an
order denying a motion to quash for lack of personal jurisdiction.
The rationale underpinning the motion to quash rule is that a
defendant who makes a general appearance forever waives a
personal jurisdiction objection.3 (McCorkle v. City of Los Angeles,
supra, 70 Cal.2d at pp. 257–258.) The same reasoning does not
3 In light of this rationale, the Supreme Court has recognized
that a defendant may challenge on appeal the denial of a motion
to quash where he or she does not make a general appearance
and a default judgment is entered. (McCorkle v. City of Los
Angeles, supra, 70 Cal.2d at p. 258.) In other words, an order
denying a motion to quash may be challenged on appeal of a final
judgment, but only if the plaintiff does not waive the issue by
entering a general appearance.
8
apply to inconvenient forum motions. Unlike personal
jurisdiction, a defendant who makes a general appearance does
not waive the inconvenient forum issue. To the contrary, section
410.30 permits a defendant to bring such a motion after making a
general appearance. (Britton v. Dallas Airmotive, Inc., supra, 153
Cal.App.4th at pp. 134–135; Global Financial Distributors Inc. v.
Superior Court, supra, 35 Cal.App.5th at p. 192.) Moreover,
section 410.30 does not set a deadline for a defendant to file an
inconvenient forum motion, which undercuts Plaintiffs’ policy
argument that venue should be conclusively decided at the outset
of litigation; the Legislature clearly believes otherwise.
We also do not agree with Plaintiffs’ suggestion that,
because section 418.10 expressly permits the defendant to
challenge an adverse ruling via a writ petition, inconvenient
forum motions brought under that statute should be treated
differently from motions brought under section 410.30. “[T]he
Legislature knows how to make writ review the exclusive mode of
review if it wants to.” (Wilshire Ins. Co. v. Tuff Boy Holding, Inc.
(2001) 86 Cal.App.4th 627, 636.) Section 170.3, for example,
states a “determination of the question of the disqualification of a
judge is not an appealable order and may be reviewed only by a
writ of mandate.” (§ 170.3, subd. (d), italics added.) Similarly,
Business and Professions Code section 2337 provides “review of
the superior court’s decision [regarding revocation or suspension
of a medical license] shall be pursuant to a petition for an
extraordinary writ.” (Italics added.) Section 418.10, in contrast,
states a defendant “may petition an appropriate reviewing court
for a writ of mandate . . . .” (§ 418.10, subd. (c), italics added.)
Such permissive language does not preclude postjudgment
appellate review. (See Wilshire Ins. Co. v. Tuff Boy Holding, Inc.,
9
supra, 86 Cal.App.4th at p. 637 [section 877.6, which provides an
aggrieved party “may” petition for review by writ of mandate,
does not preclude postjudgment appellate review].)
Accordingly, we follow the general rule that an
interlocutory order—in this case, the order denying Minassian’s
renewed inconvenient forum motion—may be challenged on
appeal of the final judgment.
2. The Trial Court Properly Denied Minassian’s
Renewed Motion
Minassian contends the trial court improperly applied the
law of the case doctrine to deny his renewed motion. We
disagree.
“ ‘The doctrine of “law of the case” deals with the effect of
the first appellate decision on the subsequent retrial or appeal:
The decision of an appellate court, stating a rule of law necessary
to the decision of the case, conclusively establishes that rule and
makes it determinative of the rights of the same parties in any
subsequent retrial or appeal in the same case.’ ” (Morohoshi v.
Pacific Home (2004) 34 Cal.4th 482, 491.) The doctrine
“precludes a party from obtaining appellate review of the same
issue more than once in a single action.” (Katz v. Los Gatos–
Saratoga Joint Union High School Dist. (2004) 117 Cal.App.4th
47, 62; see Searle v. Allstate Life Ins. Co. (1985) 38 Cal.3d 425,
434.) “The law of the case may apply even where the appeal is
from a decision short of a full trial, including a judgment on a
demurrer, a nonsuit order or denial of an anti-SLAPP motion.”
(Hotels Nevada, LLC v. L.A. Pacific Center, Inc. (2012) 203
Cal.App.4th 336, 356.)
In Aghaian I, we determined Iran is not a suitable forum,
which was necessary to our ultimate holding that the court erred
10
in granting Minassian’s original inconvenient forum motion. (See
Aghaian I, supra, 234 Cal.App.4th at p. 429 [“The sole issue on
appeal is whether Iran is a suitable alternative forum. It is not.
Thus, we reverse the court’s order.”].) As such, that
determination is law of the case and defeats Minassian’s renewed
motion, which required he show Iran is a suitable alternative
forum.
Minassian contends the law of the case doctrine is
irrelevant because it applies only to legal principles, whereas the
question of whether Iran is a suitable forum is a factual issue.
(See People v. Boyer (2006) 38 Cal.4th 412, 441–442.) Minassian
is wrong. As we explained in Aghaian I, when “the facts are not
disputed, the effect or legal significance of those facts is a
question of law . . . .” (Aghaian I, supra, 234 Cal.App.4th at p.
434.) We then proceeded to determine that, on the record before
us, Iran is not a suitable forum as a matter of law.
Minassian alternatively suggests the law of the case
doctrine does not apply because his renewed motion was based on
new evidence. (See People v. Boyer, supra, 38 Cal.4th at p. 442
[law of the case “controls the outcome on retrial only to the extent
the evidence is substantially the same”].) He points out that
between his initial motion and the renewed motion, Plaintiffs
filed an action in Iran. According to Minassian, by doing so, they
waived any argument that Iran is not a suitable forum.
Minassian provides no authority to support his waiver
argument, nor are we aware of any. He similarly fails to provide
authority that the existence of a pending action in an alternative
forum is relevant to determining whether it is suitable. In the
absence of such authority, Minassian has not shown the record on
remand differed in a meaningful way. As the trial court noted,
11
the key facts in Aghaian I that led us to conclude Iran is not a
suitable forum have not changed. The law of the case doctrine
applies and compels the denial of Minassian’s renewed
inconvenient forum motion.
II. Plaintiffs’ Claims Are Not Barred By the Statute of
Limitations
Minassian contends Plaintiffs’ claims are barred by the
statute of limitations. We disagree.
A. Background
Plaintiffs filed their original complaint on January 7, 2013,
and their first amended complaint (FAC) less than a month later.
In September 2013, Plaintiffs filed declarations under
section 377.32, in which they asserted, among other things:
(1) no proceeding is pending for the administration of their
parents’ estates; (2) they are their parents’ successors in interest
with respect to the pending action; and (3) no other person has a
superior right to commence the action.
While the first appeal in this case was pending, a probate
estate was opened for Gagik. On June 19, 2015—about a week
after the remittitur was issued—Plaintiffs filed new section
377.32 declarations, which referenced the probate estate.
Plaintiffs filed a second amended complaint (SAC) in
September 2015. Minassian demurred, arguing Plaintiffs lacked
standing because their section 377.32 declarations were
incomplete or contained errors. He further argued Plaintiffs’
claims were barred because the statute of limitations had run
before they obtained standing. The trial court disagreed, relying
on Parsons v. Tickner (1995) 3l Cal.App.4th 1513 for the
proposition that a section 377.32 declaration is not a prerequisite
to filing or continuing an action.
12
B. Analysis
Minassian does not dispute that Plaintiffs filed their
original complaint within the applicable statute of limitations.
Nonetheless, he insists Plaintiffs lacked authority to pursue their
claims until they filed their second set of section 377.32
declarations in June 2015.4 As a result, he argues, the original
complaint and FAC are nullities, and the first valid complaint
was the SAC, which was filed after the statute of limitations had
run. We disagree.
Generally, “a cause of action for or against a person is not
lost by reason of the person’s death, but survives subject to the
applicable limitations period.” (§ 377.20, subd. (a).) Under
section 377.30, a “cause of action that survives the death of the
person entitled to commence an action or proceeding passes to
the decedent’s successor in interest, . . . and an action may be
commenced by the decedent’s personal representative or, if none,
by the decedent’s successor in interest.”
Section 377.32, in turn, requires a “person who seeks to
commence an action or proceeding or to continue a pending action
or proceeding as the decedent’s successor in interest” file a
declaration stating, among other things, (1) “ ‘no proceeding is
now pending in California for administration of the decedent’s
estate,’ ” (2) the declarant is the decedent’s successor in interest,
and (3) “[n]o other person has a superior right to commence the
action or proceeding or to be substituted for the decedent in the
pending action or proceeding.” (§ 377.32, subd. (a).)
4 For unexplained reasons, Minassian simply ignores
Plaintiffs’ first set of declarations filed in September 2013.
13
Here, Plaintiffs asserted causes of action as their parents’
successors in interest, yet they filed their section 377.32
declarations well after commencing the action. Section 377.32,
however, “does not require that the affidavit be filed as a
condition precedent to commencing or continuing the action.”
(Parsons v. Tickner, supra, 31 Cal.App.4th at p. 1523.) Instead,
at most, “failure to file the affidavit could possibly subject the
action to a plea in abatement.” (Id. at pp. 1523–1524.) That
Plaintiffs failed to immediately file their section 377.32
declarations, therefore, does not render the original complaint
and FAC nullities.
Minassian alternatively argues the initial complaint and
FAC were nullities because the causes of action belonged to
Plaintiffs’ parents’ estates and could be pursued only by the
personal representatives of those estates. Minassian does not
support this argument with meaningful analysis, relevant
authority, or a single citation to the record. Accordingly, we
consider the issue forfeited. (See Badie v. Bank of America (1998)
67 Cal.App.4th 779, 784–785 [“When an appellant fails to raise a
point, or asserts it but fails to support it with reasoned argument
and citations to authority, we treat the point as waived.”].)
Minassian suggests that, even if the pleadings were not
nullities, the statute of limitations nonetheless continued to run
until Plaintiffs filed their declarations. In support, he cites
Bourhis v. Lord (2013) 56 Cal.4th 320 (Bourhis) for the
proposition that the running of a statute of limitations is a
substantive defense, which cannot be prejudiced by subsequent
acts by a plaintiff to gain the ability to sue. However, as the
Supreme Court explained in Bourhis, this rule specifically applies
to suspended corporations and arises out of Revenue and
14
Taxation Code section 23305a, which provides a suspended
corporation’s subsequent revival “shall be without prejudice to
any action, defense or right which has accrued by reason of the
original suspension or forfeiture . . . .” There is no analogous
statute governing section 377.32 declarations. As such,
Minassian’s reliance on Bourhis is misplaced.
Minassian further argues in his reply brief that the SAC
did not relate back to the original complaint because it alleged
different injuries suffered by different people. Specifically, he
insists the original complaint stated claims for injuries to
Plaintiffs personally, whereas the SAC alleged claims based on
injuries to their parents.
Confusingly, Minassian seemed to argue the opposite in his
opening brief. He claimed the “purported causes of action
asserted [in the original complaint] belonged to [Plaintiffs’]
parents’ estates, not to them,” and Plaintiffs did not “allege any
injury suffered by them at the hands of the defendant, but rather
only injuries suffered by their parents.”
We agree with Minassian’s initial position. Plaintiffs’
original complaint alleged they are the children and heirs of their
deceased parents, Gagik and Knarik. It alleged the case arose
out of “fiduciary duties owed to Gagik and Knarik, and through
them to Plaintiffs and the Trust.” (Italics added.) Further, it
requested the court prohibit Minassian from “[t]ransferring or
encumbering any of Gagik’s or Knarik’s properties . . . .” (Italics
added.) As Minassian seemed to recognize in his opening brief,
the clear implication of these allegations is that Plaintiffs sought
relief for injuries to their parents, rather than injuries to
themselves. Accordingly, we reject Minassian’s belated argument
that Plaintiffs’ various complaints alleged different injuries.
15
III. The Court Did Not Abuse Its Discretion by Imposing
Discovery Sanctions on Minassian
Minassian contends the trial court improperly imposed
sanctions on him for abusing the discovery process. We disagree.
A. Background
In August 2015, Plaintiffs propounded discovery requests
seeking information and documents related to the properties at
issue in the case. Following an informal discovery conference,
Minassian agreed to provide responses and documents by
January 29, 2016. The trial court issued a stipulated order to
that effect.
In February 2016, Plaintiffs moved for terminating, issue,
and evidentiary sanctions on the basis that Minassian failed to
meaningfully respond to their interrogatories or produce all
relevant documents related to the properties at issue, including
appraisals, deeds, mortgage documents, accountings, sales
records, and payment records.
Minassian admitted his production was “below
expectations.” According to Minassian, he believed he had
additional responsive documents at his home in Iran, and he
originally planned to travel there to retrieve them. However, as
he was preparing to depart, he learned he could not travel to Iran
until he renewed his Iranian passport. Minassian submitted the
passport for renewal in January 2016, but it had not yet been
processed. Minassian represented that he would return to Iran
to obtain the documents as soon as he received his renewed
passport.
The trial court declined to terminate the case, and instead
imposed issue, evidentiary, and monetary sanctions. It found
Minassian’s failure to comply with the court’s prior discovery
16
order was “willful and without substantial justification.” The
court explained: “Defendant’s claimed reason for failing to
comply [with the discovery order] is that he did not realize his
Iranian passport was expiring and that Iran requires the
passport to be valid for six months after entry. But Defendant
cites no admissible evidence in support of his contention, beyond
his own declaration, which is hearsay and [Defendant] is not
qualified to testify as to Iranian law. And Defendant offers no
plausible explanation as to precisely when he discovered the
issue with his passport and neither Defendant nor his attorney
offers any explanation as to why Plaintiffs’ counsel and the Court
was not immediately notified when this passport issue was
discovered. . . . [¶] Moreover, there has been no believable
reason offered by the defendant as to why he has to personally go
to Iran to obtain the documents. Apparently they are in boxes at
his home in Tehran. Additionally, he is involved in both civil and
possible criminal litigation in Iran and is apparently represented
by lawyers there. Hence, why can’t his Iranian lawyers obtain
these documents and send them in some manner to the defendant
here in Los Angeles? No reasonable explanation has been
offered.”
In addition to monetary sanctions, the court issued four
evidentiary/issue sanctions as follows:
(1) “The jury will be instructed that Defendant failed to comply
with the Court’s [discovery] order and the jury will be
instructed it is permitted, but not required, to find that if
Defendant had complied such information would have
revealed Defendant misrepresented the true sales prices of
Plaintiffs’ properties.”
17
(2) “[T]he jury will be instructed it is permitted, but not
required, to find that if Defendant had complied [with the
discovery order] such information would have revealed
Defendant sold or leased Plaintiffs’ properties for their fair
market value.”
(3) “Defendant is precluded from presenting evidence
regarding the actual sales or lease price of Plaintiffs’
properties.”
(4) “Defendant is precluded from presenting evidence
regarding any costs or expenses he incurred in redeeming,
selling, or leasing Plaintiffs’ properties.”
The court stayed the sanctions pending Minassian’s
compliance with the initial discovery order by May 16, 2016.
On May 20, Plaintiffs moved to lift the stay based on
Minassian’s noncompliance with the court’s order. According to
Plaintiffs, Minassian failed to produce documents related to the
vast majority of the 255 properties at issue in the case, and his
interrogatory responses continued to be evasive and incomplete.
In opposition, Minassian submitted a declaration in which
he detailed his efforts to comply with the court’s order. According
to Minassian, he decided not to travel to Iran because he was
advised by a lawyer that, due to a criminal conviction, he would
not be allowed to leave the country once he entered it. So
instead, he instructed four people to search his apartment for
documents related to the case (he apparently remembered a
friend in Iran had a spare key to his apartment). He then turned
over to Plaintiffs all the relevant documents they found.
Minassian explained he did not possess many of the documents
Plaintiffs requested because he was never the custodian of
18
records or the primary person responsible for the relevant
transactions.
Following the hearing, the court granted Plaintiffs’ motion
to lift the stay, with minor modifications to the evidentiary
sanctions.5 The court noted that Minassian’s interrogatory
responses continued to be evasive and incomplete. In addition,
“[w]hile Minassian admits to being involved in selling and
reclaiming 255 properties belonging to Plaintiffs, he produced:
(1) sales agreements for 55 of the 255 properties; (2) accounts for
11 of the 255 properties . . . ; (3) deeds for 55 of the 255
properties; (4) communications . . . related to 2 of the 255
properties; (5) 12 documents reflecting payments made to
Plaintiffs’ family . . . ; (6) no appraisals even though his Cross-
Complaint references appraisals valuing a portion of the
properties between $75–80 million; and (7) no documents related
to mortgages, loans, or leases even though Minassian testified
that many of the properties had been leased or mortgaged.”
The court continued: “Minassian now for the first time
presents the argument that he was not in custody or control of
much of the requested records, when before his excuse was he
could not travel to Iran to retrieve the documents. It has been
excuse after excuse from Minassian as to his complete failure to
comply with repeated discovery orders and his obligations and
the Court is left with no choice but to lift the stay for such
repeated failure.”
5 Among other minor changes, the court modified the third
and fourth sanctions to permit Minassian to present evidence
corroborated by documents he produced in discovery.
19
In its statement of decision, the trial court indicated its
calculation of damages was consistent with the evidentiary
sanctions as follows. Where Minassian advised Plaintiffs of the
sales price of a property that was substantially inconsistent with
its fair market value, the court assumed the fair market value
was the actual price, unless other evidence showed the reported
price was true and fair. Similarly, where Minassian sold a
property without evidence of the sales price, the court assumed it
was sold for the fair market value, unless evidence showed
otherwise.
B. Relevant Law
“California discovery law authorizes a range of penalties for
conduct amounting to ‘misuse of the discovery process.’ ” (Doppes
v. Bentley Motors, Inc. (2009) 174 Cal.App.4th 967, 991, quoting §
2023.030.) Misuses of the discovery process include “[f]ailing to
respond or to submit to an authorized method of discovery” and
“[d]isobeying a court order to provide discovery.” (§ 2023.010,
subds. (d) & (g).)
Section 2023.030 permits the trial court to impose
monetary and nonmonetary sanctions on a party for abusing the
discovery process. Among other forms of sanctions, the court may
“impose an issue sanction by an order prohibiting any party
engaging in the misuse of the discovery process from supporting
or opposing designated claims or defenses.” (Id., subd. (b).) The
court may also prohibit the party from introducing designated
matters in evidence. (Id., subd. (c).) Although not expressly
required by statute, courts have noted that, absent unusual
circumstances, nonmonetary sanctions are warranted only if a
party willfully fails to comply with a court order. (See Lee v. Lee
(2009) 175 Cal.App.4th 1553, 1559; Liberty Mutual Fire Ins. Co.
20
v. LcL Administrators, Inc. (2008) 163 Cal.App.4th 1093, 1102
(Liberty Mutual); Biles v. Exxon Mobil Corp. (2004) 124
Cal.App.4th 1315, 1327.)
We review the trial court’s imposition of discovery
sanctions for abuse of discretion. (Liberty Mutual, supra, 163
Cal.App.4th at p. 1102.) A court abuses its discretion when it
acts arbitrarily, capriciously, or beyond the bounds of reason.
(Maughan v. Google Technology, Inc. (2006) 143 Cal.App.4th
1242, 1249–1250.)
C. Analysis
Minassian first contends the sanctions were improper
because there was no showing he willfully defied his discovery
obligations. According to Minassian, he produced all the
documents he possessed and was therefore unable to comply with
the court’s order to a greater extent. We disagree.
Initially, Minassian completely ignores the court’s finding
that he gave inadequate responses to Plaintiffs’ interrogatories,
which alone provided a sufficient basis for the sanctions.
Moreover, given Minassian’s role in the transactions and the
significant sums at stake in those transactions, the trial court
could reasonably infer he was in possession of more documents
than he produced. Consistent with this inference, Minassian
initially objected to Plaintiffs’ requests for production on the basis
that “the cost of obtaining and shipping such large quantities of
documents . . . is an exceptional circumstance obviating any
obligation to comply with the request.”
The trial court was also free to disregard Minassian’s self-
serving claim that he produced all the relevant documents in his
possession. Minassian, after all, previously made suspect excuses
for his failure to produce more documents. In response to
21
Plaintiffs’ request for sanctions, for example, he claimed he was
unable to obtain the relevant documents because they were in his
apartment in Iran, yet he could not travel there and no one else
had access to it. As the court pointed out, such claims were
simply not credible. Not surprisingly, after the court issued its
sanctions order, Minassian was quickly able to arrange for
someone to search his apartment in Iran. On this record, the
court was reasonably skeptical of Minassian’s latest excuse for
his failure to comply with his discovery obligations. The court did
not act arbitrarily, capriciously, or beyond the bounds of reason.
For the first time in his reply brief, Minassian argues the
sanctions were improper because the court did not make an
express finding that he acted willfully. Initially, Minassian
forfeited this argument by failing to explicitly raise it in his
opening brief. (Nordstrom Com. Cases (2010) 186 Cal.App.4th
576, 583 [“[P]oints raised for the first time in a reply brief on
appeal will not be considered.”].)
Even if we were to overlook the forfeiture, we would reject
Minassian’s argument on the merits. Minassian has not provided
any relevant authority supporting his claim that the court was
required to make an express finding of willfulness. He cites Deyo
v. Kilbourne (1978) 84 Cal.App.3d 771, but that case concerned a
different statute—former section 2034, subdivision (d)—which
explicitly required a finding of willfulness. (See Puritan Ins. Co.
v. Superior Court (1985) 171 Cal.App.3d 877, 884 [by its own
terms, section 2034, subdivision (d) is limited to cases of willful
failure to comply]; Kohan v. Cohan (1991) 229 Cal.App.3d 967,
971.) Here, the court issued the sanctions pursuant to section
2023.030, subdivisions (b) and (c). Neither provision requires
willfulness, much less an express finding of such.
22
In any event, contrary to Minassian’s contentions, the court
did make an express finding of willfulness. Indeed, the court’s
initial sanctions order states: “[T]his court finds that defendant’s
failure to comply with this court’s previous order was willful and
was without substantial justification.”
Minassian alternatively contends the sanctions were
excessive because they effectively relieved Plaintiffs of their
burden of proving liability and damages. Once again, we
disagree.
With respect to liability, Minassian claims the sanctions
permitted an inference that a sale occurred if the Galstians lost
their title to a property. Presumably, he is referring to the
second sanction, which allowed the trier of fact to assume
Minassian “sold or leased Plaintiffs’ properties for their fair
market value at the time of said sale or lease.” The wording of
the sanction is somewhat ambiguous. It could mean the trier of
fact was free to assume both that Minassian sold or leased the
properties, and that he did so at fair market value. Alternatively,
it could simply mean that for any properties Minassian sold or
leased, the trier of fact could assume he did so at fair market
value. The trial court, however, removed any ambiguity when it
indicated in its statement of decision that it considered this
sanction only for purposes of calculating damages. The sanction,
therefore, did not relieve Plaintiffs of the burden of proving
liability.
Minassian is also wrong to claim the sanctions relieved
Plaintiffs of their burden of proving damages. The sanctions
simply permitted the trier of fact to assume the properties that
were sold or leased were done so at fair market value. Plaintiffs,
23
therefore, still had the burden to prove the fair market value of
the properties in order to show damages.
IV. The Court Properly Awarded Plaintiffs Equitable
Relief
Minassian contends the trial court erred in awarding
Plaintiffs relief because the contract underlying their claims was
illegal and unenforceable. We disagree.
A. Background
Minassian filed a motion for judgment on the pleadings
challenging Plaintiffs’ second amended complaint on the basis
that the claims arose out of an illegal contract. Specifically, he
argued his agreement with Gagik violated the United States
government’s sanctions on Iran, including Executive Order No.
12959 and the Iranian Transactions and Sanctions Regulations
(“Iran Sanctions”).
In opposition, Plaintiffs argued the contract was not illegal
because Minassian could have lawfully reclaimed and sold the
properties so long as he obtained licenses from the U.S. Office of
Foreign Asset Control (OFAC). Although the parties did not
specifically contemplate Minassian obtaining such licenses, under
the terms of the power of attorney, Minassian was required to
complete all legal requirements. Moreover, according to
Plaintiffs, it was impossible to obtain the licenses at the time of
contracting because the licensure application required the name
of the buyers, which were not known at that time.
Plaintiffs alternatively urged the court to enforce the
contract on equitable grounds. In support, they pointed out that
in 2012, OFAC issued a general license legalizing the sort of real
estate transactions contemplated under the contract.
24
The trial court determined the contract was illegal and
granted Minassian’s motion on that basis. Nonetheless, it
granted Plaintiffs leave to amend their complaint to include any
possible claims for equitable, rather than legal, relief.
Plaintiffs’ operative third amended complaint asserted
causes of action for unjust enrichment and money had and
received.6 It alleged Minassian was unjustly enriched and
received money and/or property that was intended to be to
Plaintiffs’ benefit by (1) keeping the proceeds from the sales of
Plaintiffs’ properties entirely for himself; (2) underreporting the
proceeds from the sales and keeping a larger share of the
proceeds for himself; and (3) taking possession of Plaintiffs’
properties and putting them in his own name without receiving
authorization or paying Plaintiffs consideration. In relief,
Plaintiffs sought restitution of all amounts by which Minassian
was unjustly enriched.
Minassian renewed his illegality defense at trial. The court
again found that, although the contract was illegal, Plaintiffs
were entitled to pursue equitable relief. We discuss the court’s
decision in more detail below.
B. Enforcement of Illegal Contracts
Generally, an illegal contract may not serve as the basis for
an action, either in law or equity. (Kashani v. Tsann Kuen China
Enterprise Co. (2004) 118 Cal.App.4th 531, 541 (Kashani).) By
refusing to entertain the enforcement of illegal contracts, courts
maintain their integrity while at the same time deterring the
formation of such contracts. (Tri-Q, Inc. v. Sta-Hi Corp. (1965) 63
6 Despite the court’s order, Plaintiffs included both legal and
equitable claims in their operative third amended complaint.
The court subsequently struck the legal causes of action.
25
Cal.2d 199, 218 (Tri-Q); Tiedje v. Aluminum Taper Milling Co.
(1956) 46 Cal.2d 450, 454; Yoo v. Jho (2007) 147 Cal.App.4th 1249,
1255.) Such a rule also “prevent[s] the guilty party from reaping
the benefit of his wrongful conduct,” and “protect[s] the public from
the future consequences of an illegal contract.” (Tri-Q, supra, 63
Cal.2d at p. 218.)
The general rule that courts will not enforce illegal contracts
is not absolute. Rather, “[t]he fundamental purpose of the rule
must always be kept in mind, and the realities of the situation
must be considered.” (Norwood v. Judd (1949) 93 Cal.App.2d
276, 288–289 (Norwood).) As explained in Norwood, courts should
not apply the general rule when: (1) the public cannot be protected
because the transaction has been completed; (2) no serious moral
turpitude is involved; (3) the defendant is the one guilty of the
greatest moral fault; and (4) to apply the rule will permit the
defendant to be unjustly enriched at the expense of the plaintiff.
(Ibid.; see Tri-Q, supra, 63 Cal.2d at pp. 218–220 [quoting
Norwood with approval]; Johnson v. Johnson (1987) 192
Cal.App.3d 551, 557; Dunkin v. Boskey (2000) 82 Cal.App.4th
171, 196; Homestead Supplies, Inc. v. Executive Life Ins. Co. (1978)
81 Cal.App.3d 978, 990.) “In such circumstances, equitable
solutions have been fashioned to avoid unjust enrichment to a
defendant and a disproportionately harsh penalty upon the
plaintiff.” (Southfield v. Barrett (1970) 13 Cal.App.3d 290, 294.)
C. The Iran Sanctions7
In 1995, President Clinton issued Executive Order No.
12959, 60 Federal Register 24757 (May 6, 1995), which imposed
7 Much of our discussion of the Iran Sanctions comes from
the comprehensive overview of the topic found in Kashani, supra,
118 Cal.App.4th 531.
26
trade sanctions on Iran. “The order is clothed with the most
serious of purposes, and it is couched in the broadest of terms.
It prohibits, with only limited exceptions, the exportation ‘of any
goods, technology . . . , or services,’ the reexportation ‘of any goods
or technology,’ the entering into ‘any transaction . . . by a United
States person relating to goods or services of Iranian origin,’ and
‘any new investment by a United States person in Iran.’
[Citation.] Moreover, it bars ‘any transaction . . . that evades or
avoids’ its restrictions. [Citation.] The obvious purpose of the
order is to isolate Iran from trade with the United States.”
(United States v. Ehsan (4th Cir.1998) 163 F.3d 855, 859; see also
Transfair Int’l, Inc. v. United States (2002) 54 Fed.Cl. 78, 80–81.)
OFAC implemented the executive order by promulgating the
Iranian Transactions and Sanctions Regulations (31 C.F.R. Pt.
560).
There are “two ways to avoid the prohibitions on dealing
with Iran: coverage under a general license authorizing certain
categories of transactions (see 31 C.F.R. §§ 501.801(a), 560.311,
560.505–560.535; 31 C.F.R. §§ 501.801(b), 560.312) and issuance
of a specific license. The Regulations state that prohibited
transactions ‘which are not authorized by general license may be
effected only under specific licenses.’ (31 C.F.R. § 501.801(b).) [¶]
. . . A person does not need to apply for a general license because
the Regulations themselves authorize the covered transactions.”
(Kashani, supra, 118 Cal.App.4th at pp. 546–547, fn. omitted.)
In contrast, a “specific license is a document issued by OFAC,
upon application, authorizing a particular transaction to a
particular person or entity. (31 C.F.R. 501.801(b).)” (Id. at p.
547.)
27
In October 2012, OFAC issued a general license (the 2012
General License) authorizing the sort of real estate transactions
contemplated by the contract in this case. The license provides:
“Individuals who are U.S. persons are authorized to engage in
transactions necessary and ordinarily incident to the sale of real
property in Iran and to transfer the proceeds to the United
States, provided that such real property was either acquired
before the individual became a U.S. person, or inherited from
persons in Iran. Authorized transactions include, but are not
limited to, engaging the services of any persons in Iran necessary
for the sale, such as an attorney, funds agent, and/or real estate
broker.” (31 C.F.R. § 560.543(a).)
D. Analysis
The trial court determined that, although the underlying
contract between Minassian and Gagik was illegal, the factors set
out in Norwood, supra, 93 Cal.App.2d 276 supported allowing
Plaintiffs to pursue equitable relief. We agree with the court’s
thorough analysis of each factor, as well as its conclusion that
permitting Plaintiffs to pursue equitable relief was appropriate in
this case.8
As to the first factor—whether the public cannot be
protected because the transaction has been completed—the trial
court determined that ordering Minassian to pay Plaintiffs the
value of the properties and money he took would not harm the
8 Because we conclude the trial court properly allowed
Plaintiffs to pursue equitable relief, we need not consider
Plaintiffs’ argument that the underlying contract was legal.
For the same reason, Plaintiffs’ motion to strike a section of
Minassian’s reply brief concerning the legality issue is moot.
28
public because it would not result in any further enrichment to
Iran. We agree with the court’s analysis of the issue.
Minassian insists permitting Plaintiffs to obtain equitable
relief harms the public by providing “direct pecuniary support to
the Ayatollah and his terrorist plots.” In support, he points to
evidence showing the Iranian government receives fees when a
person reclaims property from it. Plaintiffs, however, did not
seek to enforce the contract or compel Minassian to recover any
additional properties from the Iranian government. Instead, they
merely sought compensation for the properties and money that
Minassian had already improperly obtained. Such relief provides
no benefit to the Iranian government.
We also do not agree with Minassian’s claim that “effective
deterrence” is served only by refusing to permit equitable
remedies. In light of the 2012 General License, there is presently
no need to deter parties from entering into similar contracts.9
As to the second factor, the trial court concluded no serious
moral turpitude was involved. The court reasoned that the 2012
General License permits the sort of real estate activities at issue,
which makes clear “the contract herein contemplated activity
9 For the first time in his reply brief, Minassian insists the
2012 General License does not apply to most of the properties at
issue because it does not authorize the “wind-down of commercial
enterprises in Iran.” (31 C.F.R. § 560.543(b)(1).) Minassian
forfeited this argument by failing to raise it in his opening brief.
(Nordstrom Com. Cases, supra, 186 Cal.App.4th at p. 583.) In
any event, although Minassian points to evidence showing some
of the properties at issue were commercial and industrial, he fails
to point to evidence showing his reclamation and sales of those
properties were done in connection with a wind-down of a
commercial enterprise.
29
barred by statute rather than an act of moral turpitude.”
Once again, we agree with the court’s analysis of the issue.
Relying on Khamooshpour v. Holder (D. Ariz. 2011) 781
F.Supp.2d 888 (Khamooshpour), Minassian insists a violation of
the Iran Sanctions necessarily reflects bad moral character. If
anything, however, Khamooshpour actually supports the trial
court’s finding that the violations in this case did not involve
serious moral turpitude.
In Khamooshpour, a naturalization applicant argued his
conviction for willfully violating the Iran Sanctions did not reflect
on his moral character because it was not a crime of moral
turpitude. (Khamooshpour, supra, 781 F.Supp.2d at p. 895.) The
federal district court rejected this argument, explaining that non-
moral turpitude crimes may nevertheless reflect on an applicant’s
moral character, at least for purposes of the naturalization
statutes. (Ibid.) Although never stated explicitly, it appears the
court agreed with the applicant that a violation of the Iran
Sanctions is not a crime of moral turpitude. Moreover, in finding
the conviction negatively reflected on the applicant’s moral
character, the district court emphasized that the violations were
knowing and willful. (Id. at pp. 896–897.) Here, Minassian
points to no evidence in the record showing Gagik knew the
contract contemplated acts that violated the Iran Sanctions.
Khamooshpour, therefore, is of no help to him.
As to the third factor, the trial court concluded Minassian
was the party at greatest moral fault for violating the sanctions.
The court explained: “[T]he evidence supports the conclusion
that it was Minassian’s obligation to obtain a specific license.
The power of attorney enumerated numerous powers and duties
including that he []was to carry out all relevant legal formalities
30
pertaining to the subject of this power of attorney. . . . Galstian
hired Minassian due, in part, to his knowledge that Minassian
maintained a residence in Tehran, understood how to work
within the Iranian legal system because of his prior experience
and agreed, pursuant to the power of attorney to ‘complete all
legal requirements’ which indicates that Galstian expected
Minassian to act legally in fulfilling the goals of their agreement.
[Minassian’s] experience, skill and reputation would have
implicitly reassured Galstian that [Minassian] was, in fact,
capable of, and would, act legally. Most importantly, it should
also be noted that in accepting the power of attorney, Minassian
undertook a fiduciary obligation to Galstian.”
Minassian does not directly contest the court’s findings, nor
does he argue the court drew the wrong conclusion from them.
Instead, he contends Plaintiffs were more at fault because their
parents initiated the illegal contract. While that fact tends to
support Minassian’s position, it does not substantially affect the
trial court’s analysis of the issue. We agree with the court that
this factor weighs in favor of permitting Plaintiffs to pursue
equitable relief.
As to the final factor—whether the defendant would be
unjustly enriched—the trial court found as follows: “Minassian . .
. used his authority . . . to, in effect, acquire the great majority of
[the Galstians’] properties for his own benefit and then defend his
actions by saying their agreement was illegal and unenforceable.
His explanation that he took title to the many properties to
protect both title and possession may have had that effect in
some instances but nevertheless rings hollow because the
transactions reveal his true motivation was his own financial
gain. If that was not so, he would have told Galstian of the sales
31
and other transactions, would have accounted to, and paid the
moneys received to, Galstian. . . . Instead, he took Plaintiffs’
assets and now, having been caught, defends his actions on the
ground that what he has done is illegal, but he should have the
benefit thereof.”
Once again, Minassian does not meaningfully contest the
trial court’s factual findings or its analysis of this factor. Instead,
relying on Kashani, supra, 118 Cal.App.4th 541, he insists there
is no possible equitable justification for awarding relief in a case
involving a violation of the Iran Sanctions. We disagree.
Kashani involved a contract between American citizens and
a group of Chinese companies to manufacture and sell computers
in Iran. (Kashani, supra, 118 Cal.App.4th at pp. 537–538.) The
Americans sued the Chinese companies for breach of contract,
and the trial court granted the defendants’ motion for summary
judgment on the basis that the contract violated the Iran
Sanctions. (Id. at p. 537.) The Court of Appeal affirmed, finding
the plaintiffs failed to “establish[] any basis for departing from
the practice of courts generally not to enforce a contract in
violation of law.” (Id. at p. 557.) Among other things, the court
noted the plaintiffs sought only lost profits, and they did not
allege “any benefit was conferred on or retained by defendants,
that defendants have been unjustly enriched, or that any joint
venture between plaintiffs and defendants retains monies that
could be disbursed to the joint venturers.” (Id., at p. 557.)
Contrary to Minassian’s suggestions, Kashani does not
stand for the proposition that a court may never award relief in a
case involving a violation of the Iran Sanctions. Although the
court stated generally “an agreement in violation of trade
restrictions promulgated for national security reasons . . . should
32
be unenforceable,” it nevertheless proceeded to consider
numerous equitable factors before concluding enforcement was
not appropriate under the facts of that case. (See Kashani,
supra, 118 Cal.App.4th at pp. 557–558.) Here, the trial court
considered similar factors and found they weighed in favor of
providing relief. For the reasons discussed above, we agree with
that conclusion.
Finally, we reject Minassian’s passing contention that
awarding Plaintiffs equitable relief would itself constitute a
violation of the Iran Sanctions. Minassian cites Bassidji v. Goe
(9th Cir. 2005) 413 F.3d 928 (Bassidji) in support, but his
reliance is misplaced.
In Bassidji, the plaintiff sought to enforce guarantees for
reimbursement of certain fees he paid to the Iranian government
related to a shrimp egg harvesting business in Iran. The Ninth
Circuit held the agreement was unenforceable because the
“transaction promoted the transfer of wealth to Iran, including, it
appears, the payment of fees to the Iranian government.”
(Bassidji, supra, 413 F.3d at p. 935.) The court also declined to
permit equitable remedies because doing so would itself “violate
the precise terms of the Execute Order . . . [by] provid[ing] funds
to the Iranian economy, paying for goods in Iran. As such, it
would violate both the letter of the Executive Order and its
fundamental purposes.” (Bassidji, supra, 413 F.3d at p. 939.)
Here, in contrast, Plaintiffs sought the return of property and
money that Minassian improperly obtained at their expense.
Such relief provides no funds to the Iranian government or
economy, nor does it otherwise violate the Iran Sanctions.
33
DISPOSITION
The judgment is affirmed. Respondents are awarded their
costs on appeal.
CERTIFIED FOR PUBLICATION
BIGELOW, P. J.
We Concur:
GRIMES, J.
STRATTON, J.
34