Patel v. Crown Diamonds, Inc.

Filed 3/30/16; pub. & mod. order 4/29/16 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
RITA PATEL et al.,
G051439
Plaintiffs and Appellants,
(Super. Ct. No. 30-2014-00713449)
v.
OPINION
CROWN DIAMONDS, INC., et al.,
Defendants and Respondents.
Appeal from a judgment of the Superior Court of Orange County, Linda
Marks, Judge. Reversed.
John L. Dodd & Associates, John L. Dodd and Benjamin Ekenes; Law
Offices of Timothy J. Donahue and Timothy J. Donahue for Plaintiffs and Appellants.
Michelman & Michelman, Ryan S. Michelman and Ronald E. Michelman;
Benedon & Serlin, Douglas G. Benedon and Gerald M. Serlin for Defendants and
Respondents Crown Diamonds, Inc. and Ana Alonso.
* * *
Rita Patel appeals the trial court’s entry of a judgment of dismissal after
granting terminating sanctions striking her complaint under Code of Civil Procedure
section 128.7 (all further statutory references are to this code). The court concluded Patel
filed the complaint for an improper purpose without evidentiary or legal support because
her claims were barred by res judicata based on her previous adversary action in federal
court opposing Victor Ali’s bankruptcy petition.1 After Victor Ali obtained his
bankruptcy discharge, however, Patel did not sue him in this action for fraud and related
claims, but rather his business partners, including Ana Alonso, and their company Crown
Diamonds, Inc. (Crown). Principles of res judicata and collateral estoppel do not apply to
insulate defendants from answering for what Patel claims are their fraudulent activities.
We therefore reverse the trial court’s entry of judgment based on terminating sanctions
against Patel and entry of monetary sanctions again Patel and her attorney.
I
FACTUAL AND PROCEDURAL BACKGROUND
Patel filed this action in March 2014 against Crown, Alonso, and a host of
other individual named and Doe defendants whom she alleged, along with Alonso and
Victor Ali, owned Crown and operated it to defraud her of hundreds of thousands of
dollars after her husband died.2 Her complaint alleged against all the defendants causes
of action for fraud, false promises, negligent misrepresentations, negligent infliction of
emotional distress, negligence per se, accounting, and unfair business practices.
1 Because Victor Ali shares the same last name as many other defendants
(see fn. 2 below), we refer to him by his full name for clarity.
2 Apart from Crown and Alonso, the other named defendants have failed to
oppose or respond in any manner to Patel’s appeal. Those defendants are: Wahid Ali,
Alvin Ali, Haroon Ali, Prabhawati Wati Ali, Rachana Ali, Rita S. Ali, Priscilla Gutierrez,
and Frank Hernandez (collectively, the other defendants).
2
According to Patel’s complaint, Alonso, Victor Ali, and the other
defendants “all owned and operated Crown,” but they utilized the corporate structure for
fraudulent purposes. Patel therefore sought to pierce Crown’s corporate veil based on
allegations that defendants “deliberately undercapitalized their business and are the alter
egos of one another, unfairly seeking to deceive and mislead plaintiff.”
Patel alleged defendants, as Crown’s owners and operators, hatched a “plan
. . . to strip [her] of all of her money and assets” for their own use. Once defendants
obtained Patel’s assets, she alleged they conspired to “hide the assets,” and she alleged
they fraudulently transferred them “to and among each other and to Does 5-25.”
According to Patel, another aspect of the plan involved “Victor Ali tak[ing] all
responsibility for the loss/fraud [by] fil[ing] bankruptcy. This way, they would have the
money and the debt would be discharged, and plaintiff would not be able to find the
hidden assets.”
More specifically, Patel alleged “[t]he saga” of defendants’ fraud against
her “began back in 2008.” Her husband died in October 2008, leaving her with two
young children to support. She had only the equivalent of a sixth grade education, no
experience in business, and did not read, write, or understand English well, which she
claimed the defendants exploited to obtain her funds. According to Patel’s complaint,
“By design, defendants always and only dealt with plaintiff when she was alone.
Defendants did not want plaintiff to get any professional advice from an outsider or
friend.”
They plied her with gifts. According to her complaint, “About a week after
her husband died, the[] defendants presented plaintiff and her two children with gifts.
These were presented under false pretense, to gain plaintiff’s trust.” Patel’s complaint
alleged, “The gifts were designed to loosen up the plaintiff . . . and to make her feel
beholden to these defendants. Defendants knew that plaintiff was emotionally weak,
3
vulnerable, alone, depressed, lonely and sad,” and that “they could take advantage of the
plaintiff and her lack of education and experience.”
According to Patel’s complaint, Victor Ali, “a smooth salesman, . . . acted
as the lead spokesman for the other defendants.” He was their “pitchman, acting on
behalf of the other defendants.” After learning Patel would receive $100,000 in life
insurance proceeds, Victor Ali contacted her at defendants’ behest and offered to help her
with her paperwork and bills. He persuaded her to add him as a cosigner on her bank
account. Next, according to Patel’s complaint, “defendants, with Ali taking the lead,
convinced plaintiff to withdraw [all] $200,000 from the retirement account that her
husband had set up before he died,” and to deposit those funds in her checking account.
Patel then met Victor Ali and another, unknown “agent of . . . the other
defendants” at Crown’s office, where she signed “a stack of papers” based on their
instruction that “it was necessary and beneficial to her and her children.” She received no
copies of the paperwork, but later learned it was for a loan of $417,000 taken against her
home.
According to Patel’s complaint, once her checking account and financial
position had been plumped up, defendants began “to entice [her] to turn over money to
the defendants,” apparently in exchange for a position at Crown as a means to support
herself and her children. Thus, “[o]ne of the promises that Ali and the others made, was
to put plaintiff on the Crown Diamond payroll.” In December 2008, for example, Victor
Ali promised to “put plaintiff on [Crown’s] payroll” in exchange for a $100,000 “loan.”
Patel wrote him a check for $100,000 from her bank account, and two weeks later Victor
Ali increased the amount by writing another check on the account for $200,000. In early
January 2009, “Victor Ali and the others shared” in an additional $391,824 of Patel’s
funds as the proceeds, minus a broker’s fee, of the $417,000 loan in her name, again with
promises she would be placed on Crown’s payroll.
4
Patel alleged defendants obtained a total of $691,824 from her with “no
intention of putting [her] on the payroll.” Instead, “[d]efendants intended to deceive
plaintiff with this false promise and others.” When Patel attempted to contact Victor Ali
about her promised payroll position, “he talked her in circles [and] ignored the question.”
According to Patel’s complaint, when she sought “something in writing from
defendants,” Victor Ali simply used the occasion to gain further advantage on
defendants’ behalf, “ha[ving] plaintiff sign an interest free loan for 11 years o[n]
$150,000, involving defendants.”
Soon, Patel began to receive late notices on the $417,000 mortgage
encumbering her home. Patel called Victor Ali “and the others, trying to find out why the
payment[s],” which they had promised to make, “had not been made.” While defendants
had been easy to reach before they obtained her funds, “calling her all the time, on a daily
basis,” Patel asserted in her complaint that “[a]fter defendants got [her] money, they
avoided plaintiff and avoided all contact with her and would not return [her] phone calls.”
Patel finally reached Victor Ali in March 2009 to demand he reimburse her funds, but he
“refused, stating he didn’t have the money.”
A year later in March 2010, it appears defendants or Victor Ali may have
made at least token repayments because, as Patel acknowledged in her complaint, the
principal amount they owed her declined from the original sum of $691,824 to $675,000.
As Patel phrased it in her complaint, “defendants finally agreed to pay $7,500 per month,
at 8% interest, on the princip[al] of $675,000, which defendants had taken from
plaintiff.” But Patel came to view the agreement as only another false promise or fraud
in defendants’ continuing pattern of falsehoods to defraud her. She alleged in her
complaint that the March 2010 repayment agreement was merely “a further effort to carry
out the conspiracy and to pacify [her]. . . . The agreement was executed, but defendants
had no intention of ever completing payments. Instead, defendants’ conspiracy was to
5
make payments for awhile, and then have Victor Ali declare bankruptcy.” (Italics
added.)
It is not clear how or why defendants allegedly believed a discharge in
bankruptcy for Victor Ali would absolve them of their repayment obligation. To the
contrary, Patel alleged in her complaint that defendants — and not just Victor Ali — had
promised in March 2010 to repay her. Specifically, she alleged she “reasonably relied
upon representations, the mannerisms [sic?], and the statements and promises of
defendants. These representations were repeated on or about March 2, 2010, at which
time defendants promised to repay plaintiff.” (Italics added.)
In any event, plaintiff alleged defendants’ conspiracy to take her funds
without fully repaying her reached its fulfillment in December 2013, after Victor Ali
obtained a discharge in his personal bankruptcy proceeding. Patel alleged: “Before that
date, defendants were paying the agreed amount of $7,500 per month to plaintiff. Once
the conspiracy was completed, and the bankruptcy was granted to Victor Ali, defendants
then stopped paying.” As noted, Patel then filed her complaint in this action in
March 2014 alleging claims against defendants — but not Victor Ali — for fraud, false
promises, negligent misrepresentations, negligent infliction of emotional distress,
negligence per se, accounting, and unfair business practices.
Defendants filed both a demurrer and a motion for sanctions under
section 128.7. Defendants included as an exhibit a March 2010 agreement in which
Crown and Victor Ali had agreed to repay Patel as she alleged in her complaint.
Defendants pointed out that the agreement followed and served to settle a lawsuit Patel
filed in 2009, in which she alleged Victor Ali, with Alonso’s and the other defendants’
knowledge and participation, fraudulently induced her to loan money to Crown, and then
refused to return the money. Defendants did not claim a res judicata bar based on the
settlement and dismissal of Patel’s 2009 lawsuit rendered her new lawsuit worthy of
sanction for lack of an evidentiary or legal basis.
6
Rather, defendants premised their sanctions motion on the bankruptcy
court’s dismissal under Federal Rules of Civil Procedure, rule 12(b)(6) of Patel’s
adversary action opposing Victor Ali’s bankruptcy discharge. Defendants asserted that
dismissal rendered Patel’s lawsuit against them in this action wholly untenable and
improper.
In its tentative ruling, the trial court overruled defendants’ demurrer as to
Patel’s causes of action for fraud, false promises, negligent misrepresentations,
accounting, and unfair business practices, and sustained the demurrer with leave to
amend on her causes of action for negligent infliction of emotional distress and per se
negligence. The court also denied defendants’ motion for sanctions and to strike Patel’s
complaint, observing that it overruled the demurrer on which defendants’ based their
sanctions motion.
Neither Patel nor her attorney appeared at the hearing on the sanctions
motion, where the trial court took the matter under submission and then reversed course
from its tentative ruling and granted the motion. The court struck Patel’s complaint with
prejudice and granted defendants’ motion for $12,306.50 in monetary sanctions against
Patel and her attorney, to compensate for defendants’ attorney fees defending the case.
The court summarized its ruling as follows: “Defendants have sufficiently established
that the claims alleged in this case have been previously litigated and are therefore barred
by the doctrine of res judicata and collateral estoppel. Therefore, the Court finds that
Plaintiff’s allegations and factual contentions lack evidentiary support, the legal
contentions made by Plaintiff are not warranted by existing law, the claims made by
Plaintiff in this action were brought for an improper purpose such as to harass or cause
unnecessary delay or increase the cost of litigation, and that Plaintiff and her attorney of
record have made omissions that appear to be in bad faith designed to mislead the Court.”
The court did not specify Patel’s or her attorney’s alleged omissions, but
granted defendants’ request for judicial notice of several documents, including Patel’s
7
adversary complaint pleadings opposing Victor Ali’s bankruptcy petition, the bankruptcy
court’s orders dismissing those complaints for failure to state a claim on which relief
could be granted in federal bankruptcy court, and the bankruptcy court’s order granting
Victor Ali’s bankruptcy discharge.3
II
DISCUSSION
Patel contends the trial court erroneously granted defendants’ sanctions
motion under section 128.7 based on res judicata and collateral estoppel. Section 128.7,
subdivision (b), provides, “By presenting to the court, whether by signing, filing,
submitting, or later advocating, a pleading, petition, written notice of motion, or other
similar paper, an attorney or unrepresented party is certifying that to the best of the
person’s knowledge, information, and belief, formed after an inquiry reasonable under
the circumstances, all of the following conditions are met: [¶] (1) It is not being
presented primarily for an improper purpose, such as to harass or to cause unnecessary
delay or needless increase in the cost of litigation. [¶] (2) The claims, defenses, and
other legal contentions therein are warranted by existing law or by a nonfrivolous
argument for the extension, modification, or reversal of existing law or the establishment
of new law. [¶] (3) The allegations and other factual contentions have evidentiary
support or, if specifically so identified, are likely to have evidentiary support after a
reasonable opportunity for further investigation or discovery. [¶] (4) The denials of
factual contentions are warranted on the evidence or, if specifically so identified, are
reasonably based on a lack of information or belief.”
We “review a Code of Civil Procedure section 128.7 sanctions award under
the abuse of discretion standard.” (Peake v. Underwood (2014) 227 Cal. App. 4th 428,
441.) “The scope of discretion,” however, “always resides in the particular law being
3 We grant defendants’ motion to take judicial notice of Victor Ali’s personal
bankruptcy filing, in which he listed Patel as an unsecured creditor. (Evid. Code, § 459.)
8
applied, i.e., in the ‘legal principles governing the subject of [the] action . . . .’” (City of
Sacramento v. Drew (1989) 207 Cal. App. 3d 1287, 1297.) “Action that transgresses the
confines of the applicable principles of law is outside the scope of discretion and we call
such action an ‘abuse’ of discretion.” (Ibid.) Whether res judicata or collateral estoppel
applies under the facts of a particular case poses a question of law. (Allstate Ins. Co. v.
Mel Rapton, Inc. (2000) 77 Cal. App. 4th 901, 907.) Patel argues the trial court erred as a
matter of law in applying res judicata and collateral estoppel as the basis for its sanctions
award. We agree.
The preclusive effect of a bankruptcy judgment on a party to a later state
court action is determined under res judicata principles. (See Roos v. Red (2005)
130 Cal. App. 4th 870, 879 (Roos); see also Martin v. Martin (1970) 2 Cal. 3d 752, 758-
759, italics omitted [“‘The normal rules of res judicata and collateral estoppel apply to
the decisions of bankruptcy courts’”].) “‘The doctrine of res judicata rests upon the
ground that the party to be affected . . . has litigated, or had an opportunity to litigate the
same matter in a former action in a court of competent jurisdiction, and should not be
permitted to litigate it again to the harassment and vexation of his opponent.’” (Roos, at
pp. 879-880.)
“The doctrine of res judicata prohibits a second suit between the same
parties on the same cause of action.” (Boeken v. Philip Morris USA, Inc. (2010)
48 Cal. 4th 788, 792.) Res judicata extends to the parties’ privies. (See, e.g., Rice v.
Crow (2000) 81 Cal. App. 4th 725, 734 [doctrine applies “only to the same causes of
action between the same parties or their privies”].)
“Under the requirement of privity, only parties to the former judgment or
their privies may take advantage of or be bound by it. [Citation.] A party in this
connection is one who is ‘directly interested in the subject matter, and had a right to
make a defense, or to control the proceeding, and to appeal from the judgment.”
[Citations.] A privy is one who, after rendition of the judgment, has acquired an interest
9
in the subject matter affected by the judgment through or under one of the parties, as by
inheritance, succession, or purchase.” (Bernhard v. Bank of America (1942) 19 Cal. 2d
807, 811 (Bernhard), italics added; see also Rodgers v. Sargent Controls & Aerospace
(2006) 136 Cal. App. 4th 82, 90-91 (Rodgers).) We review a trial court’s privity
determination de novo “‘“because the issue, which ultimately involves the requisites and
limits of due process, is a legal one.”’” (Rodgers, at p. 91.)
Defendants’ res judicata claim on which they premised their sanctions
motion failed at the outset because they were neither parties to Patel’s adversary action in
the bankruptcy proceeding, nor Victor Ali’s privies. It is undisputed they were not
parties to the action because it arose from Victor Ali’s personal bankruptcy petition, not a
petition by Crown, Alonso, or any of the other defendants in this case. Nor were they
privies because although Patel asserted in her adversary action in the bankruptcy
proceeding that Victor Ali committed fraud in obtaining and retaining her funds, to the
extent Crown or Alonso or the other defendants may have been implicated to a greater or
lesser degree, they had no direct interest in the subject matter, nor any right to make a
defense, control the proceeding, or appeal from the judgment. (Bernhard, supra,
19 Cal.2d at p. 811.) They could not intervene in the proceeding, nor assert and control a
defense nor appeal as a party or privy because the outcome of the proceeding — Victor
Ali’s bankruptcy discharge — determined his legal rights and obligations, not theirs.
Defendants claim they are privies because any liability they face in this
case is merely derivative as Victor Ali’s alleged coconspirators or aiders and abettors,
relying on Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal. App. 4th 566 (Levine). In
affirming summary judgment, the Levine court discussed the solely “derivative liability”
of an alleged conspirator whom the evidence showed committed no “direct acts” nor
“‘actually committed a tort themselves.’” (Id. at p. 579.) Here, in contrast, Patel’s
complaint in this action alleged “Defendants, and each of them, conspired, approved,
ratified, and carried out each step of their conspiracy.” (Italics added.) The complaint
10
alleged defendants engaged directly in the fraud, by “tak[ing] from plaintiff” a net sum of
$675,000, which they “hid and transferred . . . to and among each other,” and which, in
another stage of the fraud, they “finally agreed to [re]pay” the sum through Crown as
their alter ego, but without intending to complete the repayment.
In sum, unlike in Levine, Patel’s complaint alleged all of the defendants
directly participated in committing their financial torts against her. As our Supreme
Court has recently affirmed (see DKN Holdings LLC v. Faerber (2015) 61 Cal. 4th 813,
825 (DKN Holdings)), and long ago explained, “It is generally recognized that partners
are not in such privity with one another that a judgment against one partner in an action
brought against him personally on a tort arising out of the partnership business is res
judicata when the same issues are raised in subsequent litigation against another partner.”
(Dillard v. McKnight (1949) 34 Cal. 2d 209, 214.) Levine is also distinguishable because
the alleged conspirator’s noninvolvement there was decided at the summary judgment
stage. Here, in contrast, at the pleading stage the trial court may only look to “whether a
plaintiff has stated a hypothetical case” instead of “whether or not it can be proven.”
(Fuller v. First Franklin Financial Corp. (2013) 216 Cal. App. 4th 955, 962.)
The trial court found the privity requirement of res judicata satisfied here
based on its conclusion the “‘relationship between the party to be estopped and the
unsuccessful party in the prior litigation . . . is “sufficiently close” so as to justify
application of the doctrine of collateral estoppel.’” Collateral estoppel is an aspect of res
judicata. (Roos, supra, 130 Cal.App.4th at p. 879.) As noted, res judicata “precludes
parties or their privies from relitigating a cause of action,” and in this sense “has
traditionally been referred to as ‘res judicata’ or ‘claim preclusion.’” (Ibid., original
italics.)
In addition to claim preclusion, “[r]es judicata also includes a broader
principle . . . commonly referred to as ‘collateral estoppel’ or ‘issue preclusion.’ Under
this principle an issue necessarily decided in prior litigation may be conclusively
11
determined as against the parties or their privies in a subsequent lawsuit on a different
cause of action.” (Roos, supra, 130 Cal.App.4th at pp. 879-880.)
Like res judicata, collateral estoppel requires that the person or entity
asserting it was a party to the previous action or in privity with the party, among other
requirements. “‘Collateral estoppel applies when (1) the party against whom the plea is
raised was a party or was in privity with a party to the prior adjudication, (2) there was a
final judgment on the merits in the prior action and (3) the issue necessarily decided in
the prior adjudication is identical to the one that is sought to be relitigated.’” (Roos,
supra, 130 Cal.App.4th at pp. 879-880.)
The trial court’s privity analysis misses the mark. Of course “‘the party to
be estopped and the unsuccessful party in the prior litigation’” were close here because
they were one and the same: Patel. But the relevant question was whether Crown,
Alonso, and the other defendants were in privity with Victor Ali in the bankruptcy
proceeding.
The trial court concluded Victor Ali’s relationship with them “is
sufficiently close . . . such that he represented the same legal rights, and therefore
Defendants are in privity with Victor Ali in the prior bankruptcy proceeding.” (Italics
added.) But as discussed, Victor Ali represented only himself and his own interests in the
bankruptcy litigation, not the defendants. His interests were at stake; they had no rights
in the action to turn over to him, such as to defend or control the action on their behalf,
nor to appeal. The point is illustrated by considering codefendants in a conspiracy action.
Each necessarily places his or her interests first and foremost, including the decision
whether to testify against other defendants or potential defendants, and therefore would
be surprised at the notion he or she necessarily represents the others, particularly where
each is an alleged direct tortfeasor. Similarly, as discussed, business partners are not in
privity for purposes of subsequent preclusion, especially as here where plaintiff alleged
they were independently liable. (DKN Holdings, supra, 61 Cal.4th at p. 825.)
12
In any event, the trial court’s ruling fails for an additional reason. “[A]
primary factor in determining whether to give collateral estoppel effect to a prior final
judgment is whether the record in the former proceeding adequately reflects the issues
actually litigated and decided in that proceeding.” (Pitzen v. Superior Court (2004)
120 Cal. App. 4th 1374, 1384.) “The party asserting collateral estoppel bears the burden
of establishing [its] requirements.” (Lucido v. Superior Court (1990) 51 Cal. 3d 335,
341.) The same is true for res judicata. “The burden of proving that the requirements for
application of res judicata have been met is upon the party seeking to assert it as a bar or
estoppel.” (Vella v. Hudgins (1977) 20 Cal. 3d 251, 257 (Vella).)
In Vella, for example, a party had raised in the prior proceeding affirmative
defenses of waiver, equitable estoppel, and tender, and sought judgment on those grounds
based on a claim of res judicata. But as the Supreme Court explained, “The record
offered in support of the plea of res judicata is virtually barren. . . . The sparse record
presented to us fails to show either the precise nature of the factual issues litigated, or the
depth of the court’s inquiry. We decline to assume, given the summary character of this
type of action, that the mere pleading of a defense without objection by the adverse party
necessarily demonstrates adequate opportunity to litigate the defense.” (Vella, supra,
20 Cal.3d at p. 258.)
The same is true here. Defendants produced from the bankruptcy action
Patel’s pleadings and the bankruptcy court’s summary rulings dismissing each complaint
in turn for failure to state a cause of action on which relief could be granted. (Fed. Rules
of Civ. Proc., rule 12(b)(6).) But defendants did not provide for the trial court the
motions Victor Ali made to garner those rulings. As Patel observes, the bankruptcy court
may have entered the summary dismissal orders simply because of pleading faults. Or,
even assuming arguendo that Victor Ali addressed in his opposition to Patel’s complaints
defendants’ alleged involvement in the series of frauds Patel alleged, the bankruptcy
court may have concluded no claim lay at that time against the defendants if they were at
13
that time making their payments, as Patel alleges in her lawsuit here. These and other
various, plausible bases for the bankruptcy court’s dismissal of Patel’s adversary action
demonstrate it is speculative to conclude, as defendants assert, that the bankruptcy court
necessarily decided in the previous action that they bore no liability for their alleged
fraud. Defendants therefore failed to meet their burden to establish they were entitled to
sanctions and a judgment of dismissal based on res judicata and collateral estoppel
grounds.
Defendants assert federal preemption as an alternative basis on which to
uphold the sanctions order and the judgment, though they did not raise it below. The
short answer is that on the sensitive issue of sanctions, particularly terminating sanctions
and substantial monetary sanctions, Patel and her attorney were entitled to an opportunity
to meet and rebut in the trial court each and every argument for sanctions. Sanctions may
not be awarded ex parte. (Sole Energy Co. v. Hodges (2005) 128 Cal. App. 4th 199, 208.)
Patel and her attorney had notice and an opportunity to defend against the sanctions
motion, so it was not ex parte on the issues defendants raised below. But Patel and her
attorney had no notice or opportunity in the trial court to defend against the theory of
preemption defendants now propose. Accordingly, we decline to affirm the sanctions
motion on a ground not raised or argued below.
Moreover, defendants’ preemption argument fails on the merits.
Defendants argue Patel’s claims in this action are preempted because they “are entirely
predicated on the claimed wrongful filing of a bankruptcy petition and necessarily relate
to the management of the bankruptcy process.” In other words, defendants cast Patel’s
case as claim of fraud on the bankruptcy court, and therefore “exclusive jurisdiction
belongs to the bankruptcy court.” Not so. Patel does not challenge Victor Ali’s
bankruptcy discharge, and has not sued him here. Instead, Patel in this action seeks
redress for defendants’ alleged frauds against her in obtaining and retaining her funds,
not for any alleged fraud against the bankruptcy court.
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III
DISPOSITION
The judgment and the trial court’s order granting defendants’ sanction
motion are reversed. Appellants are entitled to their costs on appeal.
ARONSON, J.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
FYBEL, J.
15
Filed 4/29/16
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
RITA PATEL et al.,
G051439
Plaintiffs and Appellants,
(Super. Ct. No. 30-2014-00713449)
v.
ORDER MODIFYING OPINION
CROWN DIAMONDS, INC., et al., AND DIRECTING PUBLICATION;
NO CHANGE IN JUDGMENT
Defendants and Respondents.
The opinion filed March 30, 2016, is MODIFIED as follows:
(1) On page 2, in the last sentence of the first new paragraph, change
“again” to “against” so that the sentence ends “. . . monetary sanctions
against Patel and her attorney.”
(2) On page 2, in the first sentence of the second new paragraph, delete
“individual” so that the clause reads “and a host of other named and Doe
defendants . . . .”
(3) On page 4, in the first sentence of the third new paragraph, replace “had
been plumped up” with “ballooned” so that the clause reads “once her
checking account and financial position ballooned . . . .”
(4) On page 10, in the middle of the first new paragraph, delete the italics
on Victor Ali’s name, so that the clause states “that Victor Ali committed
fraud . . . .”
16
(5) On page 12, delete the first sentence of the second new paragraph
(“The trial court’s privity analysis misses the mark”), and replace it with
the following new sentence: “A privity defense does not apply here.”
(6) On page 12, in the fourth sentence of the third new paragraph, insert
“civil” before the word “conspiracy” so that the sentence ends “. . . in a
civil conspiracy action.”
(7) On page 12, delete the fifth sentence (beginning “Each necessarily
places . . .”) in the third new paragraph, and replace it with the following
new sentence: “Each advances his or her own interests, and therefore does
not necessarily represent the others, particularly where each is an alleged
direct tortfeasor.”
(8) On page 13, at the end of the fourth sentence of the third new
paragraph, change “faults” to “defects” so that the sentence ends “. . .
simply because of pleading defects.”
These modifications do not change the judgment.
The opinion appears to meet the standards for publication. (Cal. Rules of Court,
rule 8.1105(c).) The request for publication by Radoslovich Parker Turner, a law firm
not associated with any of the parties, is therefore GRANTED.
ARONSON, J.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
FYBEL, J.
17