Berger v. Varum ( 2019 )

Filed 5/31/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
ARKADY BERGER,
Plaintiff and Appellant,
A150629
v.
GARY VARUM et al., (San Francisco City & County
Super. Ct. No. CGC-14-542126)
Defendants and Respondents.
Plaintiff Arkady Berger sought to collect an underlying judgment against
defendant Gary Varum and his company, defendant Telesis Engineers, Inc. (jointly the
Varum defendants). Berger alleged the Varum defendants fraudulently transferred assets
to other defendants in an effort to avoid paying the judgment. While Berger’s
enforcement action against the Varum defendants and defendants Alex Varum, Charles
Thiel, Irina Varum, Natalie Kreigel, 1122 University Avenue, LLC, 1122 University,
LLC, Gia Group, LLC, California Family Company, LLC, California Family, LLC, CWR
Holdings, LLC, Bay Area Family Company, LLC, and Bay Area Family, LLC (jointly
defendants) was pending, the Varum defendants paid the outstanding judgment.
However, Berger amended his complaint to assert various consequential damages caused
by the Varum defendants’ delay in payment. Defendants subsequently filed a demurrer
alleging Berger was not entitled to recover damages above the amount of the judgment
and his enforcement costs, which the trial court granted.
Berger now appeals from the trial court’s judgment following its order sustaining,
without leave to amend, defendants’ demurrer. Berger contends his complaint asserts a
common law fraudulent transfer claim, which gives rise to consequential and punitive
damages. We agree and reverse the trial court’s order and subsequent judgment. 1
I. FACTUAL AND PROCEDURAL BACKGROUND
A. The Underlying Action
Berger hired the Varum defendants to design and provide technical support for
constructing a building in San Francisco. 2 Significant problems with the Varum
defendants’ design emerged during demolition and construction, which resulted in Berger
having to purchase an adjacent property. In 2013, Berger obtained an approximate $2.7
million judgment against the Varum defendants resulting from a prior lawsuit between
the parties. The Varum defendants subsequently appealed but did not post a bond staying
enforcement of the judgment.
While that appeal was pending, Berger filed a complaint against defendants for
action on judgment, return of distributions to shareholders of or investors in judgment
debtor, and fraudulent transfer. The complaint alleged various defendants received
distributions of money, property, interests in real estate, and other items of value from the
Varum defendants without paying adequate consideration. The complaint sought
enforcement of the judgment, various relief from the fraudulent transfers, costs,
exemplary damages, and other unspecified relief.
In 2015, this court affirmed the judgment. (Berger I, supra, A141112.)
Approximately seven months later, the Varum defendants paid the judgment, and Berger
filed an acknowledgement of satisfaction of judgment.
Berger subsequently filed a second amended complaint (complaint) modifying the
causes of action in light of the Varum defendants’ satisfaction of judgment. That
complaint asserted two causes of action against defendants for fraudulent conveyance
1
On July 20, 2018, Berger filed a request for judicial notice of four orders entered
by the San Francisco Superior Court in Mirov v. Berger (case No. CGC-07-462479).
This request is denied as such materials are not relevant to our disposition of this appeal.
2
We take judicial notice of our prior nonpublished opinion, Berger v. Varum
(Dec. 22, 2015, A141112) (Berger I). (Evid. Code, § 452, subd. (d).)
2
pursuant to Civil Code section 3439 and conspiracy to defraud. Between entry of
judgment and satisfaction of judgment, the complaint asserts the Varum defendants
utilized various mechanisms to hide the amount and ownership of their assets and their
financial condition, such as through corporate entities, asset purchase agreements,
conveyances, and asset transfers without consideration. Specifically, the complaint
alleges the Varum defendants distributed money, accounts, property, interests in real
estate, and other items of value to various individuals and entities without requiring them
to pay adequate consideration. The complaint asserts the Varum defendants took these
actions to intentionally “hinder, delay or defraud” Berger from collecting payment on the
judgment. The complaint further alleges the individuals and entities to whom these assets
were distributed “knowingly acted in concert with [the Varum defendants] to effect the
fraudulent transfers” and conspired to hide these assets to obstruct Berger’s efforts to
collect on the judgment. As a result of this conduct, Berger asserts he incurred
consequential damages and suffered emotional distress.
Defendants demurred to the complaint. They asserted the satisfaction of judgment
made Berger whole, and Berger was not entitled to recover damages above the amount of
the judgment and his enforcement costs. The trial court sustained defendants’ demurrer
without leave to amend. It concluded Berger could not pursue his fraudulent transfer
claim because Berger “cites no published authority, and the court is aware of none, that
permits a judgment creditor to seek consequential and/or punitive damages resulting from
the delay in payment of a judgment due to fraudulent transfers that occurred prior to
satisfaction of the judgment. Although [Berger] contends that he is entitled to seek
‘regular fraud damages,’ he has not alleged, nor has he shown that he can allege a
‘regular fraud’ claim.” Berger timely appealed.
II. DISCUSSION
A. Standard of Review
We independently review a trial court’s order sustaining a demurrer. (Brown v.
Deutsche Bank National Trust Co. (2016) 247 Cal. App. 4th 275, 279 (Brown).) “In doing
so, this court’s only task is to determine whether the complaint states a cause of action.
3
[Citation.] We accept as true all well-pleaded allegations in the operative complaint, and
we will reverse the trial court’s order of dismissal if the factual allegations state a cause
of action on any available legal theory. [Citation.] We treat defendants’ demurrer as
admitting all properly pleaded material facts, but not contentions, deductions, or
conclusions of fact or law.” (Ibid.) “ ‘We also consider matters which may be judicially
noticed.’ [Citation.] . . . [and] give the complaint a reasonable interpretation, reading it as
a whole and its parts in their context.” (Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.)
When “ ‘the trial court sustains a demurrer without leave to amend, we review the
determination that no amendment could cure the defect in the complaint for an abuse of
discretion. [Citation.] The trial court abuses its discretion if there is a reasonable
possibility that the plaintiff could cure the defect by amendment.’ ” (Brown, supra,
247 Cal.App.4th at p. 279.)
B. Common Law Fraudulent Transfer
The operative complaint alleges two causes of action: fraudulent transfer under
Civil Code section 3439 3 and conspiracy to defraud. It seeks to recover various “General
and Special damages.” On appeal, Berger does not contend he can recover consequential
or punitive damages under the UVTA. Rather, Berger maintains he is entitled to assert a
claim for common law fraudulent transfer, which gives rise to such remedies. We agree.
1. The UVTA Does Not Preclude a Common Law Action
Section 3439.12 of the Civil Code states: “Unless displaced by the provisions of
this chapter, the principles of law and equity, including . . . the law relating to principal
and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake,
insolvency, or other validating or invalidating cause, supplement its provisions.” Case
law has established the remedies specified in the UVTA are cumulative and not the
exclusive remedy for fraudulent conveyances. (See, e.g., Macedo v. Bosio (2001)
3
Civil Code section 3439 et seq. is the Uniform Voidable Transactions Act
(UVTA). In 2015, the former Uniform Fraudulent Transfer Act (UFTA) was renamed as
the UVTA. (Stats. 2015, ch. 44, § 3, p. 1456.) We will refer to the act by its current
name, UVTA, although some relevant case law employs the former terminology.
4
86 Cal. App. 4th 1044, 1051 (Macedo).) “They may also be attached by, as it were, a
common law action.” (Ibid.) By its terms the UVTA was intended to supplement, not
replace, common law principles relating to fraud. (Wisden v. Superior Court (2004)
124 Cal. App. 4th 750, 758 [UVTA remedies “ ‘are cumulative to the remedies applicable
to fraudulent conveyances that existed before the uniform laws went into effect’ ”];
Cortez v. Vogt (1997) 52 Cal. App. 4th 917, 930 [UVTA “makes clear its remedies are
cumulative to preexisting remedies for fraudulent conveyances”].)
Traditionally, creditors could bring fraudulent transfer cases under common law.
(See, e.g., Macedo, supra, 86 Cal.App.4th at p. 1051; Wisden v. Superior Court, supra,
124 Cal.App.4th at p. 758 [UVTA does not supersede common law of fraudulent
transfer].) Because the UVTA is not intended to replace such common law but merely
supplement it, we conclude Berger may bring such a claim under common law.4
2. Berger Has Stated a Cause for Common Law Fraudulent Transfer
Having concluded the UVTA does not preclude Berger from bringing his claim
under common law, we next must assess whether Berger adequately pled such a claim.
Defendants do not contend Berger failed to allege the details of the fraudulent
transfers with sufficient detail. Rather, they contend Berger has failed to allege a
recoverable injury arising from such transfers. “A well-established principle of the law
of fraudulent transfers is, ‘A transfer in fraud of creditors may be attacked only by one
4
The Varum defendants rely on Cardinale v. Miller (2014) 222 Cal. App. 4th 1020,
to contend the complaint is actually an action to enforce a judgment rather than a
fraudulent transfer claim. That case, however, is distinguishable. In Cardinale, the
defendants challenged the statutory basis for awarding fees in an UFTA action, asserting
in part the fee award was “improper because ‘the action against [them] was not to enforce
the judgment but rather to pursue an independent tort claim’ sounding in conspiracy.”
(Id. at pp. 1025–1026.) Our colleagues in Division Three noted, “As a factual matter,
this action was to collect the unpaid judgment,” and concluded the fee award was
authorized under Code of Civil Procedure section 685.040 (part of title 9, Enforcement of
Judgments). (Cardinale, at p. 1026, italics added.) Nothing in the opinion suggests a
party cannot bring or seek damages based on a common law fraudulent transfer claim.
(Cf. Filip v. Bucurenciu (2005) 129 Cal. App. 4th 825, 837 [“In fraudulently transferring
property, tortious conduct occurred.”].)
5
who is injured thereby. Mere intent to delay or defraud is not sufficient; injury to the
creditor must be shown affirmatively. In other words, prejudice to the plaintiff is
essential.’ ” (Mehrtash v. Mehrtash (2001) 93 Cal. App. 4th 75, 80 (Mehrtash); accord
Bennett v. Paulson (1935) 7 Cal. App. 2d 120, 123 [“ ‘The intent to delay or defraud
creditors is not enough; there must also be a resulting injury to the creditor, which must
be affirmatively shown.’ ”].) 5
Here, Berger has alleged a range of damages stemming from defendants’ conduct.
These include items such as liens and interest on those liens, lost rents, early IRA
redemptions and related penalties and taxes, losses due to diminished credit scores and
credit, increased financing fees, foreclosure fees, emotional distress, exemplary damages,
and costs. Generally, “[t]ort damages are awarded to fully compensate the victim for all
the injury suffered. [Citation.] There is no fixed rule for the measure of tort damages
. . . . The measure that most appropriately compensates the injured party for the loss
sustained should be adopted.” (Santa Barbara Pistachio Ranch v. Chowchilla Water
Dist. (2001) 88 Cal. App. 4th 439, 446–447; see also Civ. Code, § 3333 [measure of tort
damages is the “amount which will compensate for all the detriment proximately caused
thereby, whether it could have been anticipated or not”].) Nothing in the UVTA alters
this general rule. As noted above, UVTA remedies “ ‘are cumulative to the remedies
applicable to fraudulent conveyances that existed before the uniform laws went into
effect.’ ” (Wisden v. Superior Court, supra, 124 Cal.App.4th at p. 758.) And UVTA
specifically authorizes “[a]ny other relief the circumstances may require.” (Civ. Code,
§ 3439.07, subd. (a)(3)(C).) Accordingly, the damages alleged by Berger fall within the
5
Berger contends a demurrer was an improper vehicle to challenge his complaint
because it attacked his prayer for relief rather than the sufficiency of the allegations.
Because an affirmative showing of injury is required and the only alleged injuries are
those that Berger seeks to recover through his consequential damages claim, the
complaint was properly challenged via demurrer. (Cf. Rossberg v. Bank of America, N.A.
(2013) 219 Cal. App. 4th 1481, 1499–1500 [demurrer sustained as to fraud claim because
plaintiffs “failed to allege any connection between their reliance . . . and any specific
damages that reliance caused”].)
6
scope of recoverable tort damages and satisfy the damage element for a fraudulent
transfer claim for purposes of demurrer. (See Brown, supra, 247 Cal.App.4th at p. 279
[“We accept as true all well-pleaded allegations in the operative complaint”].)
Certain cases, while not awarding consequential damages, have recognized the
availability of such damages. 6 For example, in Mehrtash, supra, 93 Cal. App. 4th 75, the
plaintiff ex-wife obtained a judgment for unpaid spousal support and sought to have a
quitclaim deed given by her former husband to his stepchildren set aside under the
UFTA. However, the property was so heavily encumbered it had no value as an asset.
The court rejected her claim, concluding, “Plaintiff produced no evidence that the value
of the property could support any net recovery for her in the event the conveyance were
set aside.” (Mehrtash, at p. 81.) In doing so, however, the court expressly noted the
6
Berger cites Jhaveri v. Teitelbaum (2009) 176 Cal. App. 4th 740, to support his
position. However, we do not find Jhaveri on point. That case addressed whether the
trial court abused its discretion in allocating the value of a settlement between one debtor,
Dubois, and his spouse. (Id. at pp. 747–748.) The settlement arose from an unpaid
judgment and subsequent enforcement action against various debtors and their spouses.
(Id. at p. 744.) The plaintiffs objected to the trial court’s allocation of half the settlement
value to the enforcement action asserted against Dubois’s spouse rather than allocating
the entire settlement to the outstanding judgment. (Id. at p. 747.) The Court of Appeal
concluded the trial court did not abuse its discretion in so allocating the settlement value.
(Id. at p. 755.) It explained (1) the complaint sought “general, special and punitive
damages” against the spouse, (2) a RICO claim would have been asserted against her had
she and Dubois not entered into the settlement, and (3) the statutory UFTA claim “is not
the exclusive remedy by which fraudulent transfers may be attacked” and “the allegations
could be construed as encompassing common law tort actions . . . .” (Jhaveri, at pp. 754–
755.) In so holding, however, the court did not indicate the phrase “common law tort
actions” necessarily referenced a common law fraudulent transfer claim—as Berger’s
counsel suggested at oral argument—but likely referenced its prior statement that
“Principles of law and equity, including estoppel, fraud, misrepresentation ‘or other
validating or invalidating cause,’ are available to supplement an action under UFTA.”
(Id. at p. 755.) The court also did not determine whether the settlement amount allocated
toward Dubois’s spouse’s liability was for the compensatory, consequential, or punitive
damages prayed for in that action. Nor did it otherwise address common law fraudulent
transfer claims or whether consequential damages are recoverable for such claims.
7
plaintiff did not claim any financial injury caused by the allegedly fraudulent
conveyance. (Ibid.)
Similarly, in Kelleher v. Kelleher (N.D.Cal. Sept. 29, 2015, No. 13-cv-05450-
MEJ) 2015 WL 5693726 (Kelleher), the plaintiff brought a fraudulent transfer claim and
sought to recover monetary damages against a transferee, who temporarily held assets
received from the plaintiff’s ex-husband but returned them prior to the plaintiff’s lawsuit.
(Id. at pp. *1–*2.) The defendant transferee argued the plaintiff suffered “ ‘no
conceivable injury’ ” because the liquidated shares were fully reconveyed back to her ex-
husband. (Id. at p. *3.) In response, the plaintiff argued in part “ ‘it would frustrate the
purposes of the fraudulent transfer laws if a debtor and [a] sympathetic transferee could
continually play a “shell game” of the debtor transferring assets out of the reach of
creditors on a temporary basis to the transferee until the debtor can evade his creditors
and reach a place of temporary safety, whereupon the transferee then reconveys the assets
to the debtor, and then the process starts anew when the debtor is located.’ ” (Id. at
p. *11.) While sympathetic to the plaintiff’s position, the court concluded it was
inappropriate to impose such a remedy because the plaintiff “has not shown she was
injured. . . . Plaintiff has in effect been restored to her original position, and she has not
otherwise indicated how she suffered an injury that entitles her to a remedy beyond what
has already occurred. . . . As Defendant effectively voided the transfer himself, and
Plaintiff has not indicated that she suffered any other injury entitling her to relief,
Plaintiff has not shown how her fraudulent transfer claims provide her with a remedy.”
(Ibid., italics added; see also Renda v. Nevarez (2014) 223 Cal. App. 4th 1231, 1239,
quoting Miller v. Kaiser (1967) 164 Colo. 206 [433 P.2d 772, 775] [“ ‘It becomes
axiomatic therefore after analyzing this equitable remedy that a judgment creditor cannot
in a fraudulent conveyance action be the recipient, as against the fraudulent transferor, of
a money judgment, for the very basis of this action is the judgment debt he is
endeavoring to collect. A different situation might be presented in an action in which
special damages were alleged and proved.’ ” (italics from Renda omitted; italics
added)].)
8
Another useful comparison is Maxwell v. Fire Ins. Exchange (1998)
60 Cal. App. 4th 1446 (Maxwell). There, the plaintiff filed suit against the defendant
insurance company seeking damages for breach of contract and bad faith based on
withholding amounts due under a judgment. (Id. at p. 1448.) A few months thereafter,
the insurance companies paid the judgment including accrued interest. (Ibid.) The trial
court subsequently granted the insurance companies’ motions for summary judgment on
the basis that the plaintiff “proffered no proof of financial loss other than an alleged delay
in the payment of the judgment and the loss of use of the withheld judgment money as a
result, thereby omitting the ‘damages’ element of his causes of action for breach of
contract and bad faith and raising no triable issue of fact.” (Ibid.) The Court of Appeal
affirmed. (Id. at p. 1452.) It noted “no evidence was produced by the appellant to
establish economic loss other than his argument that a delay in payment of the sum due
from the judgment and its ‘loss of use’ was per se an economic loss which he suffered.”
(Id. at p. 1450.) Specifically, the court explained “appellant does not assert any damages
other than emotional distress,” “sworn testimony establishes that appellant’s credit was
not damaged from the delay in payment,” and “appellant’s attorney’s fees and costs were
contingent.” (Id. at pp. 1449–1450.)
Unlike the plaintiffs in Mehrtash, Kelleher, and Maxwell, Berger has alleged
specific, financial injury caused by the Varum defendants’ alleged fraudulent transfer,
including various fees and penalties, damage to his credit, and lost rental income. 7 There
may be a valid argument as to whether these claimed damages are too speculative or
were, in fact, part of the original judgment. However, we do not decide on demurrer
whether plaintiffs will be able to prove their claims, but only whether they are properly
pleaded. (Desai v. Farmers Ins. Exchange (1996) 47 Cal. App. 4th 1110, 1115.) The
7
Because consequential damages may be recoverable for Berger’s fraudulent
transfer cause of action, there potentially could be an award upon which to assess
punitive damages. (Cheung v. Daley (1995) 35 Cal. App. 4th 1673, 1677 [“an award of
exemplary damages must be accompanied by an award of compensatory damages”].)
Accordingly, Berger is equally entitled to seek a punitive damage award at this stage.
9
amount of damages is generally a question of fact. (Westphal v. Wal-Mart Stores, Inc.
(1998) 68 Cal. App. 4th 1071, 1078.) Berger’s allegations do not support a conclusion
that—should he plead and prove his case—damages are unrecoverable. 8
3. Consequential and Punitive Damages Are Not Barred by the Enforcement
of Judgments Law
Defendants next argue the provision for postjudgment interest under the
Enforcement of Judgments Law (EJL; Code Civ. Proc., § 680.010) is the sole remedy
available for any delay in collecting on a judgment. We disagree.
The EJL provides for “the reasonable and necessary costs of enforcing a
judgment,” including postjudgment interest on unsatisfied money judgments. (Code of
Civ. Proc., § 685.040; Conservatorship of McQueen (2014) 59 Cal. 4th 602, 607.)
Postjudgment interest generally runs from the date judgment is originally entered, and its
purpose “is to compensate the judgment creditor for the time value of the money until the
judgment is paid.” (Code Civ. Proc., § 685.020, subd. (a); Hernandez v. Siegel (2014)
230 Cal. App. 4th 165, 175.) While postjudgment interest provides the remedy for a
judgment creditor who faces a delay in collecting a judgment, it has no bearing on the
damages a plaintiff may seek in connection with postjudgment tortious conduct. Indeed,
the EJL is entirely silent on this issue.
Defendants’ reliance on California Fed. Savings & Loan Assn. v. City of Los
Angeles (1995) 11 Cal. 4th 342 and Gray1 CPB, LLC v. SCC Acquisitions, Inc. (2015)
8
The Varum defendants cite Forum Ins. Co. v. Devere Ltd. (C.D.Cal. 2001)
151 F. Supp. 2d 1145, to argue such damages are not recoverable. But that case does not
provide us with any meaningful guidance. In Forum, the court did not assess what
remedies arose from a common law fraudulent transfer claim. Rather, the question posed
was what remedies the plaintiffs could seek for a common law conspiracy claim based on
an UFTA violation. (Forum, at p. 1148.) The court concluded, “Terms such as ‘liability’
and ‘damages’ do not appear in the statute. [Citation.] Thus, by its terms, UFTA allows
only equitable remedies such as avoidance, attachment, an injunction, or appointment of
a receiver. Upon finding a UFTA violation, the court may cancel the transfer or impose a
lien against the transferred property, but it may not award damages.” (Ibid.) It further
concluded, “A conspiracy claim does not expand the remedies afforded by UFTA.”
(Ibid.)
10
233 Cal. App. 4th 882 does not compel us to find otherwise. In California Fed. Savings &
Loan Assn. v. City of Los Angeles, the court addressed the proper interest rate applicable
to local public entities. (Id. at p. 347.) In rejecting the plaintiffs’ argument that
postjudgment interest was unrelated to enforcing judgments, the court briefly commented
such interest “reduces the incentive to delay payment” and “serves to adequately
compensate plaintiffs.” (Id. at p. 350.) It did not address whether such an interest award
precluded subsequent damages for tortious conduct undertaken to avoid paying the
outstanding judgment. Likewise, in Gray1 CPB, LLC v. SCC Acquisitions, Inc., supra,
233 Cal.App.4th at page 891, the court addressed whether the plaintiff made a timely
motion for attorney fees incurred in attempting to enforce its judgment. The case did not
discuss what, if any, additional damages the plaintiff may recover as a result of the
defendant’s alleged fraudulent transfers, whether the plaintiff incurred or sought such
damages, or whether the postjudgment interest precluded such damages.
Nothing in the EJL expressly precludes Berger from seeking damages arising from
alleged postjudgment tortious conduct. Nor are we willing to imply such a limitation.
Accordingly, the EJL does not impact Berger’s ability to seek damages arising from the
allegations in his complaint.
4. As Alleged in the Operative Complaint, the Damages at Issue Do Not
Constitute a Double Recovery
Finally, defendants rely on Renda v. Nevarez, supra, 223 Cal. App. 4th 1231 to
contend the damages sought by Berger would amount to an impermissible double
recovery. In Renda, the court denied recovery of money damages from the debtor in a
fraudulent transfer action because it “would partially duplicate the money judgment he
had already obtained against [the defendant] in the prior action, in violation of the rule
prohibiting double recovery for the same harm.” (Id. at pp. 1236–1237.) In other words,
a creditor cannot obtain a money judgment against a debtor for the amount of the
outstanding judgment because it would create two judgments against the same debtor for
the same debt. Here, however, Berger is not attempting to obtain a duplicate recovery of
11
the underlying judgment, but pursue separate monetary damages he alleges were caused
by the Varum defendants’ postjudgment tortious conduct.
Defendants also contend the damages are duplicative because they encompass
damages caused by the construction defect claims, which were included in the in the prior
action’s judgment. At demurrer, however, we cannot conclude the requested damages
are duplicative. The complaint alleges the damages sought in the instant matter were
caused by defendants’ “efforts to hinder, delay and defraud [Berger] from collecting the
Judgment” and the resulting delay in satisfaction of judgment. We must accept these
allegations as true for purposes of defendants’ demurrer. (Brown, supra,
247 Cal.App.4th at p. 279.)
B. Conspiracy Claim
California imposes liability “ ‘ “on one who aids and abets the commission of an
intentional tort if the person (a) knows the other’s conduct constitutes a breach of duty
and gives substantial assistance or encouragement to the other to so act or (b) gives
substantial assistance to the other in accomplishing a tortious result and the person’s own
conduct, separately considered, constitutes a breach of duty to the third person.” ’ ”
(Casey v. U.S. Bank Nat. Assn. (2005) 127 Cal. App. 4th 1138, 1144; accord American
Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal. App. 4th 1451, 1477
[individual may be liable for aiding and abetting an intentional tort where he or she
“makes ‘ “a conscious decision to participate in tortious activity for the purpose of
assisting another in performing a wrongful act” ’ ”].) Because transferring funds in order
to evade creditors constitutes an intentional tort, it logically follows that California
common law should recognize liability for aiding and abetting a fraudulent transfer. (See
Filip v. Bucurenciu, supra, 129 Cal.App.4th at p. 837 [“In fraudulently transferring
property, tortious conduct occurred.”]; Taylor v. S & M Lamp Co. (1961) 190 Cal. App. 2d
700, 705 [“the second cause of action alleges, in essence, the commission of a tort by the
judgment debtors, to wit, a concealment of their assets for the purpose of defrauding their
principal creditor”].)
12
In Taylor v. S & M Lamp Co., supra, 190 Cal. App. 2d 700, for example, this
District held the plaintiff adequately stated a cause of action for conspiracy to commit a
fraudulent transfer. (Id. at p. 706.) The court reasoned “ ‘[c]ivil liability for conspiracy
to commit a tort has long been recognized in this state,’ ” and pursuant to UVTA it “is
contrary to public policy for a debtor to convey or to conceal his property for the purpose
of defrauding his creditors.” (Ibid.) The court thus concluded, “a debtor and those who
conspire with him to conceal his assets for the purpose of defrauding creditors are guilty
of committing a tort and each is liable in damages.” (Ibid.; see also Monastra v. Konica
Business Machines, U.S.A., Inc. (1996) 43 Cal. App. 4th 1628, 1644–1645 [person other
than the debtor or transferee who conspires with others to effect a fraudulent transfer may
be held jointly liable for the creditor’s damages].)
Here, Berger alleges the defendants were aware the Varum defendants planned to
fraudulently transfer assets to hinder, delay, or defraud Berger. Berger further alleges the
defendants “agreed and intended that the fraudulent transfers be committed,” the
defendants in fact “received assets without adequate consideration in furtherance of the
fraud upon [Berger],” and Berger was harmed as a result of such conduct. These
allegations are sufficient to state a cause of action for conspiracy. (See Casey v. U.S.
Bank Nat. Assn., supra, 127 Cal.App.4th at p. 1144.)
III. DISPOSITION
The order sustaining the demurrer and the judgment dismissing Arkady Berger’s
second amended complaint is reversed, and the action is remanded to the trial court for
further proceedings. Berger may recover his costs on appeal. (Cal. Rules of Court,
rule 8.278(a)(1), (2).)
13
____________________________
Margulies, J.
We concur:
_____________________________
Humes, P. J.
_____________________________
Banke, J.
A150629
Berger v. Varum
14
Trial Court: San Francisco County Superior Court
Trial Judge: Hon. Harold Kahn
Counsel:
Law Office of Paul J. Katz and Paul J. Katz for Plaintiff and Appellant.
Severson & Werson, David A. Ericksen and Adam Polakoff for Defendant and
Respondent.
15