Korchemny v. Piterman ( 2021 )

Filed 8/27/21; Certified for Publication 9/17/21 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
REMI KORCHEMNY,
Plaintiff and Appellant,
A155483
v. A157716
DMITRY PITERMAN et al.,
(Alameda County
Defendants and Respondents.
Super. Ct. Nos.
RG-15796802 &
RG-15796804)
This opinion primarily addresses two consolidated appeals by Remi
Korchemny, the payee on two promissory notes, who sued Milanendra
(Milan) Piterman, her trust, and her ex-husband Dmitry Piterman on those
notes. The first appeal is from a summary judgment obtained by Milan and
her trust, who demonstrated that the notes were usurious, and that the
payments made on them showed they had been paid in full. The second is
from an order awarding Milan and the trust over $318,000 in attorney fees.
Dmitry, who was one of the obligors on the notes, filed a cross-
complaint against Milan and the trust, on which Milan and the trust
obtained judgment on the pleadings against Dmitry. Dmitry has filed what
1
he calls a “cross-appellant’s brief” in support of his appeal from that
judgment.
We conclude that neither of Korchemny’s appeals has merit, nor does
Dmitry’s “cross-appeal,” and we affirm both judgments and the attorney fee
order.
BACKGROUND
The General Setting, the Parties, and the Participants
Milan and Dmitry Piterman were married in 1990. In December 2013,
Milan filed a petition for legal separation, beginning a proceeding that
respondents’ brief calls a “highly-contentious marital dissolution action,” a
highly contentious action that has generated a 17-page register of actions—
an action as best we understand it that continues to this day.
Remi Korchemny (Korchemny), a close friend of Dmitry’s, filed a
lawsuit against Dmitry, Milan, and Milan’s Freedom Trust (the trust) based
on two promissory notes. Dmitry filed a cross-complaint against Milan and
the trust. After years of extensive litigation, Milan and the trust obtained
summary judgment against Korchemny based on their affirmative defense of
usury. They were later awarded attorney fees. Korchemny appealed both
the judgment and the attorney fee order and is the primary appellant in both
appeals here. Milan and the trust are the respondents and when referred to
collectively will sometimes be called respondents.
Following their summary judgment, respondents obtained judgment on
the pleadings against Dmitry on his cross-complaint. Dmitry appealed, and
has filed what he calls a “cross-appellant’s brief.”
2
Another party below is Svetlana Avelicheva (Avelicheva), Dmitry’s
mother, who also sued respondents and Dmitry.1
And as to other “participants” below, it might be said they include the
attorneys for Dmitry, Avelicheva, and Korchemny, which attorneys became
the subject of discovery, an unusual occurrence to be sure, and whose conduct
became relevant to the issues below, particularly the attorney fee award.
The Lawsuits
On December 15, 2015, Korchemny filed a complaint naming three
defendants, Milan, the trust, and Dmitry. It alleged three causes of action:
(1) breach of written contract, specifically the non-payment of two promissory
notes; (2) common counts; and (3) fraudulent conveyance under Civil Code
section 3439.04. Korchemny was represented by attorney Lawrence D.
Murray.
On the same day, December 15, Dmitry’s mother Avelicheva filed a
complaint against Milan, the trust, and Dmitry. It alleged various causes of
action arising out of a claimed investment she made in real property owned
by defendants. Avelicheva was also represented by Mr. Murray. Within
months, Murray was replaced in both cases by attorney Kevin Sullivan of
Griffin & Sullivan.
In January 2016, Milan and the trust filed an answer to Korchemny’s
complaint, which answer included various affirmative defenses, the fourth of
which was usury. They were represented by Valle Makoff, LLP.
In April, Dmitry filed his answer to the complaint, represented by the
Law Offices of Wallace Doolittle, and James Downs of that office.
1 We refer to each of the Pitermans by their first names and the other
participants by their last names, doing so for clarity and for consistency with
the briefing.
3
On April 6, Milan and the trust filed a motion to consolidate the two
cases. The trial court granted the motion, consolidating the cases for all
purposes, and they were assigned to the Honorable Robert McGuiness, a
most experienced superior court judge.
On April 26, Dmitry filed a cross-complaint against Milan and the
trust, asserting claims for indemnification and contribution.
On May 31, Milan and the trust filed their answer to Dmitry’s cross-
complaint. They also filed their own cross-complaint against Dmitry.
Milan and the trust filed a motion for leave to file amended answers to
allege additional defenses, what might be called a pro forma motion.
Korchemny and Avelicheva jointly opposed the motion. Judge McGuiness
granted the motion, and on September 15, Milan and the trust filed their
amended answer.
On November 22, 2017—as Korchemny describes it, “pursuant to court
order”—Korchemny filed a first amended complaint. It omitted the cause of
action for fraudulent conveyance, and realleged the causes of action for
breach of contract and common counts. The amended complaint added
Korchemny as trustee of a 2002 trust as plaintiff and real party in interest,
and attached the $600,000 promissory note. One thing about that complaint
pertinent here is that, as Korchemny’s opening brief describes it, his “two
causes of action are based upon two alleged promissory notes—one dated
January 2, 2000 . . . and the other December 26, 2001.”
The Discovery
The discovery in the consolidated cases was extensive, much of it
directed at Milan and the trust. But Milan and the trust also engaged in
discovery, some of which might be termed unusual, inquiring into the conduct
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of the attorneys for Dmitry, Korchemny, and Avelicheva—discovery that was
enlightening indeed. Specifically:
Milan served subpoenas on the attorneys seeking records as to the
communications between and among them and/or Dmitry. Dmitry filed a
motion for protective order to quash the subpoenas. Judge McGuiness denied
the motion, allowing Milan to proceed with her subpoenas, revealing what
can only be called cooperation, if not collusion, between and among them.
Later, Milan filed a motion to enforce a deposition subpoena to the
former e-mail provider to Dmitry’s attorney Doolittle, seeking records of
communications between him and counsel for Korchemny and Avelicheva.
The motion was granted, and the result of that discovery yielded evidence of
what respondents’ brief describes this way: “a joint campaign of blatantly
oppressive discovery conduct, including serving over 3,000+ written discovery
requests to respondents, but none to Dmitry. . . [to which] . . . respondents
responded efficiently to 1,247 special interrogatories, 317 requests for
production of documents, 279 requests for admissions, and four sets of form
interrogatories.” Not only that, the discovery revealed that Dmitry’s attorney
Doolittle was working for Korchemny, among other things preparing papers
on his behalf. And, it would develop, Dmitry was paying all the attorneys’
bills.
The Motion for Summary Judgment
On January 16, 2018, Milan and the trust filed a motion for summary
judgment on Korchemny’s amended complaint. The motion was simple and
straightforward, based on their affirmative defense of usury, arguing that
application of California usury law to the undisputed facts demonstrated that
Korchemny could not show any balance due on either alleged note because
they were fully paid under the law. In short, as Dmitry’s opening brief
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accurately describes it, the motion was based on the “4th affirmative
defense,” usury.
As described in detail below, the moving papers were extensive, over
250 pages of material that included detailed schedules and summaries of over
17 years of payments made to Korchemny on the notes.
On March 22, Korchemny filed his opposition to the motion, which
opposition made three arguments: the motion was procedurally “defective”;
the interest rate was not usurious; and the evidence supporting the motion
was inadmissible. Korchemny also filed objections to evidence.
Milan and the trust filed a reply, and the motion came on for hearing
on April 5, where, among other things, Judge McGuiness asked counsel for
Korchemny if there was in fact “any real dispute” as to the payments made
on the notes as reflected in the moving papers. Counsel replied he was “not
disputing the actual numbers.”
Following the hearing, Judge McGuiness ordered the parties to submit
additional briefing on the evidentiary objections. Both parties filed
supplemental briefs, and also responses to the supplemental briefs.
Judge McGuiness held a further hearing on August 14, and the next
day filed his order granting summary judgment. It was a comprehensive
seven-page, single spaced order that explained in detail the reasons for his
ruling.
Judgment was entered on August 24, from which Korchemny filed an
appeal.
The Motion for Judgment on the Pleadings
Days after the judgment was entered, Milan and the trust filed a
motion for judgment on the pleadings as to Dmitry’s cross-complaint. They
argued that their summary judgment demonstrated they were not liable for
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either of Korchemny’s claims and therefore could not be found liable for
Dmitry’s claims in the cross-complaint for indemnification and contribution.
Dmitry filed opposition to the motion arguing that it was not timely
and that the summary judgment did not dismiss him from Korchemny’s
complaint nor from his cross-complaint for indemnification and contribution.
Respondents filed a reply and, following a hearing, on September 25,
Judge McGuiness filed his order granting judgment on the pleadings.
Judgment was entered on November 21, from which Dmitry filed his appeal.
The Motion for Attorney Fees
Meanwhile, on October 22, Milan and the trust filed a motion for
attorney fees from Korchemny, supported by voluminous moving papers, as
discussed below. Korchemny filed, however belatedly, brief opposition,
arguing that the motion was procedurally improper in light of his appeal, and
also arguing that the motion lacked evidentiary support and that the fees
sought were excessive.
The fee motion was heard on December 4, following which Judge
McGuiness requested further briefing as to the allocation of the fees between
the defense of Korchemny’s action and the consolidated Avelicheva action and
the respective cross-complaints. Milan and the trust filed the requested brief;
Korchemny did not. Following a further hearing, on May 10, 2019, Judge
McGuiness filed his order awarding attorney fees of $318,400.50, from which
Korchemny filed his second appeal.
One last item of note is that respondents also obtained summary
judgment as to Avelicheva’s complaint. Judgment was entered dismissing it,
from which Avelicheva appealed. On August 12, 2019, we granted the
parties’ stipulated motion to consolidate the three appeals, the two by
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Korchemny and the one by Avelicheva. On October 22, Avelicheva dismissed
her appeal, and so what remains are the appeals we address here.
DISCUSSION
Introduction
As noted, Korchemny’s amended complaint alleged two causes of
action, breach of contract and common counts which, as Korchemny’s opening
brief describes it, “causes of action are based upon two alleged promissory
notes—one dated January 2, 2000 . . . and the other December 26, 2001.” As
also noted, respondents’ answer included affirmative defenses, one of which,
the fourth, was usury. And as Korchemny’s brief also acknowledges, the
motion for summary judgment was based on the “4th affirmative defense.”
Summary Judgment Law and the Standard of Review
Summary judgment is appropriate “if all the papers submitted show
that there is no triable issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c,
subd. (c).) “[T]he party moving for summary judgment bears the burden of
persuasion that there is no triable issue of material fact and that he is
entitled to judgment as a matter of law. . . . There is a triable issue of
material fact if, and only if, the evidence would allow a reasonable trier of
fact to find the underlying fact in favor of the party opposing the motion in
accordance with the applicable standard of proof.” (Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 850, fns. omitted (Aguilar).)
If the moving party meets its burden, the burden then shifts to the
plaintiff to show a triable issue of material fact exists. (Code Civ. Proc.,
§ 437c, subd. (p)(2).) “The plaintiff . . . shall not rely upon the allegations . . .
of its pleadings . . . but, instead, shall set forth the specific facts showing that
a triable issue of material fact exists . . . .” (Ibid.)
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We review a decision on a summary judgment motion de novo,
(Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 768 (Saelzler)), which
review leads easily to the conclusion that the summary judgment here is
right. Before turning to a demonstration of why, we begin with the law of
usury, well set forth by our Division Four colleagues in Hardwick v. Wilcox
(2017) 11 Cal.App.5th 975 (Hardwick).
The Law of Usury
“ ‘Usury if the exacting, taking or receiving of a greater rate than is
allowed by law, for the use or loan of money.’ [Citation.] A transaction is
usurious if there is a loan at greater than the legal rate of interest or an
exaction at more than the legal rate for the forbearance of a debt or sum of
money due. [Citation.]” (O’Connor v. Televideo System, Inc. (1990)
218 Cal.App.3d 709, 713.)
“ ‘California Constitution, article XV, section 1 limits the interest rate
for a “loan or forbearance” of money not primarily for personal, family or
household purposes, to the higher of: (1) 10 percent per annum or (2) five
percent plus the rate of interest prevailing on the 25th day of the month
preceding the earlier of the date of the extension of the contract to make the
loan or forbearance or the date of making the loan or forbearance, established
by the Federal Reserve Bank of San Francisco on advances to member banks
under sections 13 and 13(1) of the Federal Reserve Act. [Citation.]’ (DCM
Partners v. Smith (1991) 228 Cal.App.3d 729, 733; see also Southwest
Concrete Products v. Gosh Construction Corp. (1990) 51 Cal.3d 701, 705 [‘The
law of usury in California is based upon California Constitution, article XV,
section 1, which limits the interest payable “[f]or any loan or forbearance of
any money.” ’ (fn. omitted)].)
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“ ‘ “When a loan is usurious, the creditor is entitled to repayment of the
principal sum only. He is entitled to no interest whatsoever. [Citations.]”
[Citation.]’ (Gibbo v. Berger (2004) 123 Cal.App.4th 396, 403.) ‘The attempt
to exact the usurious rate of interest renders the interest provisions of a note
void. [Citations.]’ (Epstein v. Frank (1981) 125 Cal.App.3d 111, 122–123.)
Furthermore, interest payments that were made at the usurious rate should
be credited against the principal balance in any action to collect on the note.
(Westman v. Dye (1931) 214 Cal. 28, 31–38 . . . ; District Bond Co. v. Haley
(1935) 2 Cal.2d 308, 311; Paillet v. Vroman (1942) 52 Cal.App.2d 297,
306–308; Shirley v. Britt (1957) 152 Cal.App.2d 666, 670.)” (Hardwick, supra,
11 Cal.App.5th at pp. 978–979.)
“The essential elements of usury are: (1) The transaction must be a
loan or forbearance; (2) the interest to be paid must exceed the statutory
maximum; (3) the loan and interest must be absolutely repayable by the
borrower; and (4) the lender must have a willful intent to enter into a
usurious transaction. (See generally, 4 Miller & Starr, Cal. Real Estate Law
(2d ed. 1989) § 10:2, p. 650 . . .; Comment, A Comprehensive View of
California Usury Law (1974) 6 Sw.U. L.Rev. 166, 174.) The element of intent
is narrow. ‘[T]he intent sufficient to support the judgment [of usury] does not
require a conscious attempt, with knowledge of the law, to evade it. The
conscious and voluntary taking of more than the legal rate of interest
constitutes usury and the only intent necessary on the part of the lender is to
take the amount of interest which he receives; if that amount is more than
the law allows, the offense is complete.’ ” (Ghirardo v. Antonioli (1994)
8 Cal.4th 791, 798 (Ghirardo).)
The last sentence in Hardwick, supra, 11 Cal.App.5th 975, citing
among other cases Westman v. Dye, supra, 214 Cal. 28 (Westman), is
10
particularly applicable here, the principle that all payments of usurious
interest are applied to principal, even if the parties have treated them as
interest. As Shirley v. Britt, supra, 152 Cal.App.2d at pp. 669–670, put it,
also citing Westman, “ ‘the instant a payment is made of usurious interest it
is applied to the principal, and the principal indebtedness at the time of such
payment is reduced to the extent thereof.’ ”
Summary Judgment Was Properly Granted
Korchemny’s amended complaint was, as he acknowledges, based on
two promissory notes, one in 2000, one in 2001. Seeking summary judgment
on that complaint, respondents filed moving papers that included a
declaration from their attorney Jeffrey Makoff that attached and
authenticated 31 exhibits, many of which were based on Korchemny’s and
Dmitry’s own bank and payment records. These exhibits demonstrated that
the payments over 17 years had extinguished the notes, demonstrating the
following:
The 2000 note is the principal amount of $600,000, and provides for
“interest thereon, payable in like lawful money from [January 1, 2000,] until
paid at the rate of 12 percent per annum.” According to Korchemny’s
amended complaint, the 2000 note was “modified a few days after the making
to demonstrate the interest to be paid at 10 percent,” and that thereafter “10
percent interest was paid until early 2004, when the parties orally agreed to
reduce the actual cash payments to 7.5 percent and the remaining unpaid 2.5
plus percent added to the principal.” As will be shown, this allegation is
legally-immaterial in light of the fact that usurious interest was charged by—
and paid to—Korchemny.
The 2001 note is the principal amount of $232,400, and provides for
“interest thereon at the rate of 10 percent per annum on the unpaid balance.”
11
This interest rate is a lawful rate, but as demonstrated by the moving papers
usurious interest was charged—and paid—on it.2
The moving papers, over 250 pages of moving papers in all, presented
detailed summaries of the payments received by Korchemny on the notes,
detailed summaries based on Korchemny’s and Dmitry’s own banking and
accounting records and on their own sworn deposition testimony. Indeed, at
no point below, nor here, does Korchemny dispute the accuracy of the
payment summaries, as perhaps best demonstrated by his counsel’s response
when Judge McGuiness asked whether there is “a contest here as to the
timing and amounts of payments made.” That response: counsel was “not
disputing the actual numbers.”
In any event, the undisputed evidence demonstrated that Korchemny
received the following payments on the notes:
With respect to the 2000 note, from February 1, 2000, through
December 1, 2001 (before the 2001 note came into existence), Korchemny was
paid $8,000 per month, $96,000 a year, interest, creating an effective 16
percent interest rate for that 23-month period. In short, both the stated rate
(12 percent) and the actual rate (16 percent) in the 2000 note were usurious.
After the 2001 note came into existence (on December 26, 2001), the
$8,000/month interest payments continued for two more years until
December 31, 2003. This equated to an effective interest rate of more than
10 percent per annum on both notes.
In January 2004, Korchemny allowed a reduction of the payments on
both notes, with the unpaid interest to accrue and be added to principal,
2Both notes were demand notes, which meant that all payments made
were of interest, never principal. As Korchemny admitted, there was “never
a conversation about paying principal.”
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which meant that the $8,000/month payments were reduced to $5,000/month.
The total alleged interest obligation and the interest payments made both
remained usurious.
For the next 11 years, seven months—from January 1, 2004 to August
10, 2015—Korchemny was paid regular monthly interest payments of $5,000
(with a few months in which interest was skipped then caught-up.) After
August 2015, Korchemny was paid at least $2,500/month. This equated to an
effective interest rate of more than 10 percent per annum on both notes.
In sum, the moving papers demonstrated that when the required
principal reductions through December 31, 2003 are accounted for, every
interest payment after December 31, 2003 violated California usury limits,
with the effective interest rate on the combined notes ranging from
11.97 percent in January 2004, to 141 percent in August 2015, to over 500
percent just before the 2001 note was fully paid. And when the payments are
applied to reduce principal in accordance with California usury law, the
result is that the 2000 note was fully paid off by May 2011 and the 2001 note
fully paid off by January 2017.
In light of the above, the summary judgment was right.
Korchemny’s arguments to the contrary are easily rejected. Korchemny
makes five arguments, arguments that are brief indeed, all five set forth in
fewer than 13 pages. Some of the arguments are unsupported by any
authority, and could be denied on that ground alone; others of the arguments
are frivolous. We discuss the arguments in order.
Korchemny’s first argument is that respondents “did not meet the
standard [for] summary judgment.” After citing to two boilerplate principles
of summary judgment law, the argument concludes as follows: “There were
numerous facts overlooked by the trial court that disputed each of the
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material issues set forth in the respondents’ motion for summary judgment.
These disputes of material facts support overturning the trial court order
granting the summary judgment, and setting aside the subsequent judgment
dismissing appellant’s complaint against respondents.” That is it—and no
such “facts” are set forth.
Korchemny’s second argument is that the motion “was procedurally
defective.” The argument is premised on a misdescription—if not outright
misrepresentation—of the motion here, calling it a motion for summary
adjudication.3 Such misdescription has no place here. Korchemny made this
same argument below, an argument Judge McGuiness properly rejected,
ruling that rule 3.1350(b) of the California Rules of Court is “inapplicable,” as
Milan and the trust were “not seeking summary adjudication as to only part”
of Korchemny’s amended complaint, but “instead . . . seeks summary
judgment as to the entire [amended complaint].” Indeed.
The motion was entitled for summary judgment. It was, as noted,
directed to both causes of action, both of which, as Korchemny’s brief admits,
are based on the “two alleged promissory notes.” And the motion was based
on the defense of usury, a defense that defeated both causes of actions. Thus,
summary judgment was proper, just as it has been in countless other cases
involving affirmative defenses. (See, e.g., Anderson v. Fitness Internat., LLC
(2016) 4 Cal.App.5th 867 [release]; Jessen v. Mentor Corp. (2008) 158
Cal.App.4th 1480 [preemption].) In sum, the motion was for summary
3A misdescription Korchemny uses in the very first line of the
Introduction in his brief, where he asserts that respondents’ “summary
adjudication motion . . . was both procedurally and substantively defective.”
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judgment, and Korchemny’s cases4 dealing with summary judgment law are
inapplicable.
Korchemny’s third argument is that the notes “were not paid in full,”
an argument that has three subparts: (1) the interest was not usurious;
(2) the “note transaction was not a simple loan”; and (3) “the interest
payments do not diminish the non-usurious note principal.”
The first sub-argument, that the interest rate was not usurious, asserts
that “the parties reduced the rate to the legal rate.” This, of course, ignores
the settled law quoted above, and Korchemny’s efforts to distinguish
Hardwick and Ghirardo are unavailing.
The second sub-argument argues that the “promissory note transaction
was not a simple loan.” This argument cites some boilerplate principles of
law, and baldly concludes “there is ample testimony that the 2000 promissory
note was converted to an investment interest in the Piterman family joint
venture, and therefore not therefore [sic] strictly a loan generating usurious
interest payments.” The argument ignores, if not misrepresents, the record.
To begin with, Korchemny’s first cause of action, for breach of contract,
alleges that the promissory note agreements were breached when
respondents “stopped all payments of inter[e]st on the two promissory notes
and thereafter repudiated any obligation on said promissory notes, thus
breaching and accelerating each promissory note.” The amended complaint
seeks “[u]npaid principle [sic] in the amount of $832,400, and unpaid interest
4Sequoia Ins. Co. v. Superior Court (1993) 13 Cal.App.4th 1472, and
Homestead Savings v. Superior Court (1986) 179 Cal.App.3d 494. The third
case Korchemny cites, Maryland Casualty Co. v. Reeder (1990)
221 Cal.App.3d 961, does not even address the issue.
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as of this date of $499,712.00.” So, the action was on “the two promissory
notes.”5
Korchemny attempted the same deflection argument below, and Judge
McGuiness saw through it, observing that “Korchemny’s argument that the
2001 note was ‘converted’ into an investment is inconsistent with what he
alleges in the operative pleading.” But worse, Korchemny’s argument is
inconsistent with his sworn position below. This included, for example, his
admissions in discovery that he was a lender who made a loan; that “the loan
was for 10 percent”; and that he “was giving a loan to the family.” Dmitry too
spoke along these same lines, that “Mr. Korchemny alleges a breach of the
[2000 note] in which he lent [respondents] $600,000 . . . . Subsequently, on
December 26, 2001, Mr. Korchemny loaned an additional $232,400 to
[respondents].]” Dmitry also referred to the “Korchemny loan” and the
“money [that] was lent to us.” (Emphasis added.)
In the course of this second sub-argument, Korchemny asks that we
look beyond the “form” of the transactions to their “substance.” Respondents
say, “let’s do that,” going on to show that the notes were just that, notes, via
evidence demonstrating that the notes required monthly interest payments;
that they were secured by real property; and that payments on the notes
were deducted as interest.
5This, then, is the allegation that respondents were to address in their
motion: “ ‘The burden of a defendant moving for summary judgment only
requires that he or she negate plaintiff’s theories of liability as alleged in the
complaint. . . . The [papers] filed in response to a defendant’s motion for
summary judgment may not create issues outside the pleadings and are not a
substitute for an amendment to the pleadings.’ ” (Residential Capital v.
Cal-Western Reconveyance Corp. (2003) 108 Cal.App.4th 807, 829.)
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Korchemny’s third sub-argument is that the “interest payments do not
diminish the non-usurious note principal.” The argument is all of six lines
long, and it cites nothing, saying only that “as set forth above, the subject
promissory notes were not usurious, and the nature of the transaction was
akin to an investment with ongoing annuity payments.” That is it. And no
response is necessary.
Korchemny’s fourth argument is that he “alleged a viable common
count claim.” The argument fails for several reasons.
First, it does not matter what Korchemny “alleged.” The issue is
whether he can demonstrate a triable issue of material fact. He does not.
Second, a common count is not a recognized cause of action. As we
have described: “A common count is not a specific cause of action, however;
rather, it is a simplified form of pleading normally used to aver the existence
of various forms of monetary indebtedness, including that arising from an
alleged duty to make restitution under an assumpsit theory. (See
Zumbrun v. University of Southern California (1972) 25 Cal.App.3d 1, 14–15;
see generally 4 Witkin, Cal. Procedure [(4th ed. 1997)] Pleading, §§ 514–518,
522(1), pp. 603–609, 612.) When a common count is used as an alternative
way of seeking the same recovery demanded in a specific cause of action, and
is based on the same facts, the common count is demurrable if the cause of
action is demurrable. [Citations.]” (McBride v. Boughton (2004)
123 Cal.App.4th 379, 394; accord, Professional Collection Consultants v.
Lujan (2018) 23 Cal.App.5th 685, 690.)
Third, as Korchemny concedes, his “two causes of action are based upon
two alleged promissory notes—one dated January 2, 2000 . . . and the other
December 26, 2001 . . . .” And as shown above, the causes of action fell to the
usury defense, thus defeating any “common count,” just as Judge McGuiness
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aptly described: after noting that “Korchemny did not introduce evidence
giving rise to a triable issue of fact in this regard,” he noted that “[g]iven that
the common count is based on the same loans addressed in the first cause of
action, the claim is unmeritorious as a matter of law for the same reasons
discussed in Section B [regarding Korchemny’s first cause of action for breach
of contract] above.”
Korchemny’s fifth argument asserts that the “summary judgment was
based on incompetent and inadmissible documents and unfounded
calculations.” The argument is less than one and one-half pages and cites
nothing.6 The argument consists of conclusory statements such as “nearly all
the exhibits” to counsel’s declaration were inadmissible “on numerous
grounds,” going on to cite only two: lack of authentication and hearsay.
Hardly.
As noted, the moving papers included a declaration of attorney Makoff
that had attached to it 31 exhibits. They included payment summary
spreadsheets that set forth support for every entry in the column marked
documentation. Mr. Makoff’s declaration describes who produced the
documents and in the case of deposition testimony, attached the transcript.
And the supplemental brief submitted to Judge McGuiness, along with the
declaration of Makoff’s associate Patrick Freeman with its exhibits, provided
further authentication of the material. (See Evid. Code, §§ 1400, 1414, 1420;
People v. Gibson (2001) 90 Cal.App.4th 371, 383 [“Circumstantial evidence,
6 There is one cite, to Korchemny’s papers filed in the trial court. This
is improper, as an appellant cannot incorporate documents filed in the trial
court. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 294, fn.
20; Paterno v. State of California (1999) 74 Cal.App.4th 68, 109; Keyes v.
Bowen (2010) 189 Cal.App.4th 647, 656 [If appellant merely incorporates by
reference arguments made in papers in trial court, the contention will be
deemed forfeited].)
18
content and location are all valid means of authentication”].) On top of all
that, the material in the spreadsheets is basic addition and multiplication,
which was fully subject to verification by Korchemny and his experts.7
Finally on the issue, we note the fact—a fact ignored in Korchemny’s
brief—that Judge McGuiness considered the spreadsheets “only for purposes
of argument based on the admissible evidence submitted in the other
exhibits, declarations and deposition testimony”; he expressly did “not
consider[] them as evidence of payments separate and apart from such other
admissible evidence.”
In any event, Korchemny cites to nothing indicating that the evidence
of payments was inaccurate in any way, nothing even alluding to an error or
mistake, nothing claiming that the financial records not genuine or were
otherwise false. In short, Korchemny had every chance to raise a real issue
as to authenticity, and he did not, a failure that is perhaps not surprising,
given his counsel’s candid concession he “was not disputing the actual
numbers” involved—a concession, we note, that is “a binding judicial
admission.” (Fassberg Construction Co. v. Housing Authority of City of Los
Angeles (2007) 152 Cal.App.4th 720, 752.)
7Buried in Korchemny’s generic argument may be the claim that the
summaries required expert testimony, as his brief asserts that “These
unintelligible ‘summaries’ were manufactured by respondents as evidence for
the summary judgment, they . . . contained argument, and improper and
baseless and unsubstantiated calculations, rather than qualified expert
opinion.” Not only is the argument unsupported by any authority, it is
wrong, as manifested by Hardwick, supra, 11 Cal.App.5th 975, where the
undisputed loan payment history and calculations showed, without expert
opinion, that payments on the usurious loans totaled more than the combined
principal amount of the loans.
19
The Attorney Fee Award is Supported by the Record
Background
After obtaining summary judgment, Milan and the trust filed the
motion for attorney fees, seeking $338,730.50. The motion was based on the
contractual language in the 2000 note that, “in the event this note shall be in
default, and placed with an attorney for collection, then the undersigned
agree to pay all reasonable attorney fees and costs of collection.”
When a party seeks to enforce a contractual attorney fee provision,
Civil Code section 1717 comes into play, making the attorney fee provision
reciprocal in two ways applicable here. (Civ. Code, § 1717, subd. (a).) First,
it allows either party to collect fees if the contract allows one party but not
the other to do so. (Brown Bark III, L.P. v. Haver (2013) 219 Cal.App.4th
809, 819.) Second, it allows “a party who defeats a contract claim by showing
the contract . . . was unenforceable to nonetheless recover attorney fees under
that contract if the opposing party would have been entitled to attorney fees
had it prevailed.” (Ibid.)
The motion was accompanied by extensive supporting material,
comprising over 600 pages. That supporting material included a declaration
of Mr. Makoff that testified in detail to the work he and his firm had done.
The material included the history of the case and the extensive work
involved. It included the detailed billing records of all four attorneys
involved, along with their qualifications. And it included evidence of
prevailing billing rates.
Mr. Makoff’s declaration contained two other items of note. The first
was a description of the firm’s billing practices, demonstrating how the
Avelicheva case was billed separately from the Korchemny case and thus how
20
joint work (for example, a hearing on both cases) was allocated fairly8. The
second was a detailed showing of what respondents’ brief calls the “atypical
facts that required additional time and effort,” demonstrating that
“defending” Korchemny’s action required Milan and the trust to fight on two
fronts, against both Korchemny and Dmitry, who were working closely
together on what Korchemny’s counsel called “joint strategy” to support his
claims.
Korchemny filed opposition to the fee motion that consisted of all of five
pages, within which were four arguments: (1) the motion should be stayed;
(2) the fees sought were “excessive”; (3) the motion lacked proper evidentiary
support; and (4) the moving papers did not support the amount claimed. No
detail was provided for any argument.
Respondents’ filed a reply, and the fee motion came on for hearing on
December 4. Following that hearing, Judge McGuiness requested further
briefing from respondents as to the allocation of the fees and invited
Korchemny to file supplemental papers as to Korchemny’s contentions as
well, stating that he “expects such papers to include more specific
identification of those billing entries that Milan Defendants [sic] contend are
‘conclusory,’ excessive, or do not sufficiently relate to the Korchemny matter.”
Respondents filed such papers; Korchemny did not.
The motion came on for further hearing on February 21, and on May
10, Judge McGuiness filed his order awarding attorney fees. It was a
comprehensive, four-page, single spaced order that analyzed in detail the
reasons supporting that award. Among other things, Judge McGuiness noted
8Prompting this compliment from Judge McGuiness: “The manner in
which the joint tasks were allocated to the Korchemny matter is explained
with painstaking supporting details in the supplemental papers filed on
February 8, 2019.”
21
that the moving papers provided persuasive evidence of the billing rates of
Mr. Makoff, his partner, and his two associates, and that Korchemny “did not
contest these hourly rates or introduce evidence that they were excessive.”
He also noted how the “contemporaneous invoices” showed how the fees were
allocated. After those and other observations, Judge McGuiness concluded:
“After carefully considering the declarations and supporting invoices and
tables, and considering the explanations for the nature of the work performed
by counsel in this case over three years, the court determines that the hours
expended and for which compensation is requested from Korchemny were
reasonably incurred given the extensive work required in the case, including
the key events described at length in paragraph 5 of the Makoff declaration.”
And he awarded respondents attorney fees of $318,400.50.9 That award is
fully supported.
The Law and Standard of Review
The fundamental approach for an award for attorney fees is the
lodestar method, under which “attorney fees are calculated by first
multiplying the number of hours reasonably expended on the litigation by a
reasonably hourly rate of compensation.” (Ketchum v. Moses (2001)
24 Cal.4th 1122, 1136; Serrano v. Priest (1977) 20 Cal.3d 25, 48, fn. 23.)
“Reasonable,” the operative word in the attorney fee provision in the note, is
also the key word in the law. And “determining the amount of a reasonable
attorney’s fee . . . is necessarily ad hoc and must be resolved on the particular
9Judge McGuiness did reduce the “lodestar” amount of $338,730.50 by
$20,330.00 to take into account Korchemny’s arguments that some of the
work was for tasks in the two cases that should not be allocated to
Korchemny, as well as some work for which he already awarded attorney’s
fees.
22
circumstances of each case.” (Meister v. Regents of University of California
(1998) 67 Cal.App.4th 437, 452.)
We review Judge McGuiness’s award for abuse of discretion. (PLCM
Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1096.) As we have put it,
“ ‘ “The ‘experienced trial judge is the best judge of the value of professional
services rendered in his court, and while his judgment is of course subject to
review, it will not be disturbed unless the appellate court is convinced that it
is clearly wrong’—meaning that it abused its discretion.” ’ ” (Thayer v. Wells
Fargo Bank (2001) 92 Cal.App.4th 819, 832–833; accord, Calvo Fisher &
Jacob LLP v. Lujan (2015) 234 Cal.App.4th 608, 620.) As we added in Calvo,
quoting our colleagues in Division Four: The “ ‘only proper basis of reversal
of the amount of an attorney fee award is if the amount awarded is so large
or small that it shocks the conscience and suggests that passion and prejudice
influenced the determination.’ ” (Ibid., quoting Akins v. Enterprise Rent-A-
Car Co. (2000) 79 Cal.App.4th 1127, 1134.) That does not describe the award
here.
Korchemny makes two preliminary arguments against the fee award,
one procedural, one evidentiary, both of which arguments are frivolous.
Korchemny first asserts, in an argument of less than one page, that the fee
motion was “premature” in light of the appeal he had filed, an argument that
cites nothing in support. Respondents’ brief does cite authority, most
significantly Bankes v. Lucas (1992) 9 Cal.App.4th 365,
368–369, superseded by statute on other grounds as stated in Lee v. Wells
Fargo Bank (2001) 88 Cal.App.4th 1187, 1197, where, rejecting the identical
argument Korchemny makes here, the court held as follows: “Contrary to
Bankes’s argument, the filing of a notice of appeal does not deprive the trial
court of jurisdiction to award attorney fees and costs post trial. . . . [I]t has
23
been held that a motion for attorney fees is not premature despite the filing
of a notice of appeal. [Citations.] [¶] In any event, an award of attorney fees
as costs is a collateral matter which is embraced in the action but is not
affected by the order from which an appeal is taken. (Code Civ. Proc., § 916,
subd. (a); In re Marriage of Sherman (1984) 162 Cal.App.3d 1132, 1140.)
Consequently, filing a notice of appeal does not stay any proceedings to
determine the matter of costs and does not prevent the trial court from
determining a proper award of attorney fees claimed as costs.”
Eschewing any mention of Bankes, Korchemny responds only that the
issue is one of “equity,” an “argument” citing no case involving the issue here.
Korchemny also asserts, in an argument that is all of 15 lines, that the
“fee motion lacked proper evidentiary support.” Pointing to nothing,
Korchemny asserts that the supporting declarations were “conclusory.”
Korchemny could not be more wrong.
As the above description makes clear, Mr. Makoff’s declaration set out
in meticulous detail the evidence of the work the attorneys did, meticulous
detail noted by Judge McGuiness. And much of that work was caused by the
conduct of the attorneys for the other three litigants, Korchemny, Avelicheva,
and Dmitry. Such detail revealed, for example, the following:
Dmitry’s attorney Doolittle assisted in the preparation of Korchemny’s
complaint, a complaint naming Dmitry! Mr. Doolittle also drafted a writ of
attachment that Korchemny filed on an ex parte basis on January 12, 2016,
in an attempt to seize a $300,000 equalizing payment—a payment that only
Dmitry and his attorney Doolittle knew was due from Dmitry to Milan.
In March 2016, Korchemny and Avelicheva retained the same litigation
attorney, Mr. Sullivan, who represented Korchemny and Avelicheva from
24
that point on.10 To help Mr. Sullivan “get up to speed on the case,” Dmitry’s
attorney Doolittle sent Mr. Sullivan a detailed “explanation” of Korchemny’s
and Avelicheva’s claims. The next month, Mr. Sullivan sent Mr. Doolittle an
email stating that he had received the file from Mr. Murray (Korchemny’s
and Avelicheva’s first attorney) with the following comments: “Does
Dimtrious [sic] understand that I will have to review these? Any pointers on
what to focus on in my review to save time. Let’s talk about coordinating
joint strategy.”
Mr. Sullivan sent Mr. Doolittle an “Attorney Client Fee Agreement”
that states: “Dmitry . . . agrees to pay all fees incurred by . . . Avelicheva
and . . . Korchemny with Griffin & Sullivan.” Ensuing emails show Dmitry’s
attorney returned the signed fee agreement to Mr. Sullivan and that Dmitry
paid Korchemny’s and Avelicheva’s attorney fees.11
Mr. Sullivan’s invoices for the consolidated actions show numerous
instances of coordination between him and Dmitry’s counsel, including tasks
such as “multiple emails with Downs re: coordination of discovery and events
on behalf of the parties opposing Milan” and “t/c’s with WCD [Wallace C.
Doolittle] re: coordination efforts.” They worked together to prepare
Korchemny’s and Avelicheva’s oppositions to the motions for summary
judgment (as to both the Korchemny and Avelicheva actions), to the point
that Mr. Doolittle drafted the oppositions! Korchemny was, of course, party
to all this.
Mr. Sullivan also represented Korchemny on appeal, filing his
10
opening brief. But Mr. Sullivan passed away, and was replaced.
Emails also show that Dmitry paid the retainer for Korchemny’s and
11
Avelicheva’s joint expert, Barry Ben-Zion.
25
The above is just a small sampling, and we could go on at length to
demonstrate the extent of this coordination, a demonstration that would
cause an already long opinion to be much longer. Suffice to end by
paraphrasing the Supreme Court’s observation in Serrano v. Unruh (1982)
32 Cal.3d 621, 638, there talking about the California Attorney General, that
one “ ‘cannot litigate tenaciously and then be heard to complain about the
time necessarily spent . . . in response.’ ”
Judgment on the Pleadings was Proper
As noted, in Korchemny’s lawsuit Dmitry filed a cross-complaint
against Milan and the trust, alleging claims for indemnity and contribution.12
Following their success on summary judgment, Milan and the trust moved for
judgment on the pleadings on that cross-complaint. The motion cited to Code
of Civil Procedure section 438 (section 438), subdivision (e) of which provides
as follows: “No motion may be made pursuant to this section if a pretrial
conference order has been entered pursuant to section 575, or within 30 days
of the date the action is initially set for trial, whichever is later, unless the
court otherwise permits.” Judge McGuiness granted the motion, in the
course of which he noted he was exercising the discretion granted him by
12 The indemnification cause of action alleges: “[i]f I am found in some
manner responsible to plaintiff or to anyone else as a result of the incidents
and occurrences described in plaintiff’s complaint, my liability would be
based solely upon a derivative form of liability not resulting from my conduct,
but only from an obligation imposed upon me by law; therefore, I would be
entitled to complete indemnity from each cross-defendant.”
The contribution cause of action alleges: “if as a result of the matters
alleged by plaintiff, Dmitry Piterman is held liable for all or any part of
plaintiff’s alleged damages, cross-defendants, to the extent that their fault is
determined by the court, are obligated to reimburse and are liable for
contribution to Dmitry Piterman for all or any liability so assessed against
Dmitry Piterman and costs incurred by Dmitry Piterman.”
26
subdivision (e): “First, the court exercises its discretion to determine the
motion despite the assertion by [Dmitry] that the motion is untimely. . . .
Though Dmitry is correct that [the motion] would be untimely under the first
two clauses [of section 438, subdivision (e)], the third clause ‘authorizes the
trial court to permit late filing of such motions and does not specify any
grounds which might serve to limit its power to do so.’ [Citations.]”
Dmitry appealed, and has filed what he calls a “cross-appellant’s brief,”
which has three brief arguments, set forth in fewer than six pages. The first
argument, which consumes most of the pages, argues that the motion for
judgment on the pleadings was not “timely filed.” The argument cites to
section 438, subdivision (e), but ignores the case law under that section,
which allows courts the broadest of discretion to conclude what the court
“otherwise permits.” As our colleagues in Division Three put it, section 438,
subdivision (e) “authorizes the trial court to permit late filings of such
motions and does not specify any grounds which might serve to limit its
power to do so.” (Sutherland v. City of Fort Bragg (2000) 86 Cal.App.4th 13,
25, fn. 4; see Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1063
[Section 438, subdivision (e) permits late filings of motions for judgment on
the pleadings and does not impose a “good cause” requirement].) Dmitry has
shown no abuse of discretion.
Buried in this argument, however halfheartedly, is the intimation that
“unless otherwise permits” language required respondents to “seek the
permission” of the trial court prior to filing the motion. Dmitry cites no legal
authority to support this position, rendering the contention waived. (In re
Sade C. (1996) 13 Cal.4th 952, 994; Gonzalez v. City of Norwalk (2017)
17 Cal.App.5th 1295, 1311.) In any event, section 438, subdivision (e) does
not require a moving party seek “permission,” i.e., leave of court, before filing
27
a motion, something the Legislature knows how to say if such permission is
required. (See, e.g., Code Civ. Proc., § 472 [setting out grounds upon which a
party can amend its complaint “without leave of the court”]; Code Civ. Proc.,
§ 428.50, subd. (c) [“A party shall obtain leave of court to file any cross-
complaint except one filed within the time specified in subdivision (a) or (b)”];
Code Civ. Proc., § 405.36 [after lis pendens expunged, a claimant may not
record another lis pendens without leave of court].)
Dmitry also argues that Judge McGuiness lacked authority to “convert”
respondents’ statutory motion for judgment on the pleadings to a common
law motion and that due to such “conversion,” Dmitry was deprived of the
opportunity to oppose the motion on “common law grounds.” This argument
is fatuous. The common law ground for a motion for judgment on the
pleadings is identical to the statutory ground: “The complaint does not state
facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 438, subd.
(c)(1)(B)(ii); Sofias v. Bank of America (1985) 172 Cal.App.3d 583, 586 [“to
prevail on a [nonstatutory] motion for judgment on the pleadings, a
defendant must show a complaint fails to state a cause of action”].) As
Witkin describes it: “When the . . . party [moving for judgment on the
pleadings] is the defendant, ‘there are two permissible grounds: (a) The court
lacks subject matter jurisdiction, or (b) the complaint does not state facts
sufficient to constitute a cause of action against the defendant. . . . The
second of these is the traditional [common law] ground.’ ” (6 Witkin, Cal.
Procedure (5th ed. 2020) Proceedings Without Trial, § 189.)
Respondents’ notice of motion and their points and authorities gave
Dmitry express notice of the grounds of the motion: the cross-complaint
failed to state facts sufficient to constitute a cause of action against
respondents. Not only was Dmitry fully aware of the basis of the motion, he
28
was heard on the issue, his opposition arguing that judgment on the
pleadings would improperly “dismiss the entire complaint” because his
“claims for indemnification of all costs incurred to date are not addressed.”
Finally, even if Dmitry could show any error—which he has not—it
would necessarily be harmless. This is so because if Dmitry and his counsel
were candid, they would have to admit that there will not be anything for
which Dmitry could be indemnified, or get contribution. The fact is that if
Dmitry had acted like a defendant typically does, and fought against plaintiff
Korchemny, Dmitry too, would have proven usury, and would thus not be
liable to Korchemny. To the contrary, he would have been the prevailing
party, and entitled to his costs.
DISPOSITION
The judgments dismissing Milan and the trust from Korchemny’s
complaint and from Dmitry’s cross-complaint are affirmed, as is the order
awarding attorney fees. Milanendra Piterman and the Milan Freedom Trust
are awarded their costs on appeal.
29
_________________________
Richman, J.
We concur:
_________________________
Kline, P. J.
_________________________
Miller, J.
Korchemny v. Piterman (A155483; A157716)
30
Filed 9/17/21 after nonpublished opinion filed 8/27/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
REMI KORCHEMNY,
Plaintiff and Appellant,
A155483; A157716
v.
DMITRY PITERMAN et al., (Alameda County Super. Ct.
Nos. RG-15796802,
Defendants and Respondents.
RG-15796804)
BY THE COURT:
The opinion in the above-entitled matter filed on August 27, 2021, was
not certified for publication in the Official Reports. For good cause and
pursuant to California Rules of Court, rule 8.1105, it now appears that the
opinion should be published in the Official Reports, and it is so ordered.
Dated: ________________________ ________________________________
Kline, P.J.
1
Court: Alameda County Superior Court
Trial Judge: Hon. Robert McGuiness
Kevin M Sullivan, Law Offices of Kevin M. Sullivan; Bradley Bayan, Law
Offices of Bradley Bayan, for Plaintiff and Appellant Remi Korchemny
Jeffrey T. Makoff, Patrick T. Freeman, Roxanne E. Makoff, Valle Makoff
LLP, for Defendants and Respondents Milanendra Piterman and The Milan’s
Freedom Trust
Wallace C. Doolittle, James P. Downs, Law Offices of Wallace C. Doolittle, for
Defendant and Cross-Appellant Dmitry Piterman
A155483; A157716, Korchemny v. Piterman
2