Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, Los Angeles County Super. Ct. No. BC356558 George H. Wu, Judge.
Richard L. Garrigues and Varoujan Nalbandian for Plaintiff and Appellant.
Law Offices of Treyzon & Associates and Renata Salo for Respondent.
MOSK, J.
INTRODUCTION
Plaintiff and appellant Vartan Kojababian (plaintiff) appeals an order under Civil Code, section 1714.10, subdivision (a) denying him leave to assert a claim against an attorney, respondent Boris Treyzon (Treyzon), for conspiring with a client to violate California’s Uniform Fraudulent Transfer Act (§ 3439 et seq.) (UFTA). We affirm the trial court’s order, although plaintiff should be permitted to seek leave to file an amended complaint against Treyzon stating a cause of action that falls within the scope of section 1714.10, subdivision (c). Accordingly, we remand the matter to the trial court.
All statutory references are to the Civil Code unless stated otherwise.
BACKGROUND
We derive the facts from plaintiff’s proposed first amended complaint (the proposed FAC) and plaintiff’s verified petition. We state the facts most favorably to plaintiff. (Hung v. Wang (1992) 8 Cal.App.4th 908, 933-934.)
Plaintiff alleged, in essence, that he obtained a substantial judgment against Mher Momdjian (Momdjian) for amounts due under a promissory note. Treyzon represented Momdjian in the litigation that resulted in the judgment. Shortly before plaintiff obtained the judgment, Momdjian entered into a conspiracy with others to hinder or delay plaintiff’s ability to satisfy the judgment by cashing out the equity in Momdjian’s house.
The alleged conspiracy operated as follows: Momdjian applied for a $250,000 loan from Genuine Home Loans, Inc. (Genuine), to be secured by a second trust deed on the house. Genuine was owned and operated by Nectar Kalejian, a relative of Momdjian’s wife. Genuine was in the business of originating home loans which were then sold to third-party lenders or investors. Plaintiff alleged that Kalejian knew that Momdjian was a defendant in pending litigation, and that Momdjian therefore would not qualify for a loan under the third-party lenders’ underwriting guidelines. Accordingly, Momdjian falsely stated on his loan application that he was not a party to pending litigation. Kalejian approved the loan, disbursed the loan proceeds to Momdjian, and recorded the second trust deed. A third party, Boris Katz, then purchased the loan from Genuine. Katz was also a client of Treyzon, and Treyzon provided Katz with $170,000 of the money used to purchase the loan. Katz thereafter made no bona fide efforts to collect on the loan. Plaintiff alleged that Katz’s purchase of the loan was integral to the scheme because it (a) removed the fraudulent loan from Genuine’s books, and (b) would make voiding the loan as a fraudulent transfer more difficult because Katz could claim to be a subsequent good faith transferee.
The parties represented, and there is some evidence in the record, that Momjdian subsequently declared bankruptcy. The parties have raised no issue regarding what effect, if any, the bankruptcy proceedings might have on plaintiff’s claim against Treyzon, nor could we evaluate any such issue on the record provided. We express no opinion in that regard.
Plaintiff filed this action, alleging, insofar as relevant here, that the Genuine loan constituted a fraudulent transfer in violation of UFTA section 3439.04, subdivision (a)(1), and that Katz, Genuine, Kalejian, and another employee of Genuine, Ida Markarian, conspired with Momdjian to effect the fraudulent transfer. Plaintiff sought to void the Genuine loan and its subsequent transfer to Katz, “to the extent necessary to satisfy Plaintiff’s judgment against Defendant MOMDJIAN . . . .” Plaintiff also prayed for general damages, punitive damages and costs.
In October 2006, plaintiff petitioned pursuant to section 1714.10, subdivision (a) for leave to file the proposed FAC. The proposed FAC alleged that Treyzon participated with the other defendants in the conspiracy to effect the fraudulent transfer. Treyzon opposed the petition, arguing inter alia that plaintiff had failed to establish a reasonable probability of prevailing on his fraudulent conveyance claim. The trial court heard and denied the petition, without a statement of reasons, on November 28, 2006.
DISCUSSION
We review de novo the trial court’s order denying leave to file a complaint pursuant to section 1714.10, subdivision (a). (Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 822 (Berg & Berg).) Such an order is appealable immediately. (§ 1714.10, subd. (d).)
A plaintiff asserting a claim that an attorney conspired with a client must comply with section 1714.10. Subdivision (a) of that section requires a plaintiff to obtain court approval before filing a pleading alleging a civil conspiracy involving an attorney and his or her client arising from an attempt to contest or compromise a claim or dispute. To obtain approval, the plaintiff must establish “a reasonable probability that the party will prevail in the action.” (§ 1714.10, subd. (a); Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 82-83 (Shafer).) A “reasonable probability” has been defined as a “prima facie” case. (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 824-825, disapproved on another ground in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.) This requirement is “intended to weed out the harassing claim of conspiracy that is so lacking in reasonable foundation as to verge on the frivolous.” (Evans v. Pillsbury, Madison & Sutro (1998) 65 Cal.App.4th 599, 604.) If the proposed pleading is legally insufficient, or if the plaintiff fails to submit competent evidence to establish a prima facie case, the petition must be denied. (Berg & Berg, supra, 131 Cal.App.4th 802 at p. 817; Burtscher v. Burtscher (1994) 26 Cal.App.4th 720, 725-726; Hung v. Wang, supra, 8 Cal.App.4th at pp. 931-933.)
Section 1714.10, subdivision (a) provides in relevant part: “No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney’s representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action. . . .”
Plaintiff’s substantive claim is for a fraudulent transfer in violation of section 3439.04, subdivision (a)(1). “A fraudulent [transfer] under the UFTA involves ‘“a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.”’” (Filip v. Bucurenciu (2005) 129 Cal.App.4th 825, 829, quoting Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 648.) The UFTA defines “transfer” to include the “creation of a lien or other encumbrance.” (§ 3439.01, subd. (i).) Section 3439.04, subdivision (a)(1) defines as fraudulent any transfer made “[w]ith actual intent to hinder, delay or defraud any creditor . . . .” Whether a transfer is made with fraudulent intent is a question of fact. (Annod Corp. v. Hamilton & Samuels (2002) 100 Cal.App.4th 1286, 1294.) Under Section 3439.04, subdivision (a)(1), whether the debtor received value is only one of various factors that may be considered in determining whether the debtor actually intended to delay, hinder or defraud the creditor. (§ 3439.04, subd. (b) (5)). The remedies for a fraudulent transfer include “[a]voidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim.” (§ 3439.07, subd. (a)(1).) To the extent the transfer is voidable, the plaintiff may obtain a “judgment for the value of the asset transferred, . . . or the amount necessary to satisfy the creditor’s claim, whichever is less.” (§ 3439.08, subd. (b).) A creditor may not void a transfer or obligation, however, “against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.” (§ 3439.08, subd. (a).) Judgment may be taken against the “first transferee of the asset or the person for whose benefit the transfer was made” (§ 3439.08, subd. (b)(1)), or “[a]ny subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee” (§ 3439.08, subd. (b)(2)). A non-transferee who conspires to effect a fraudulent transfer may be held jointly liable for the creditor’s damages. (Monastra v. Konica Business Machines, U.S.A., Inc. (1996) 43 Cal.App.4th 1628, 1644-1645; see Qwest Communications Corp. v. Weisz (S.D. Cal. 2003) 278 F.Supp.2d 1188, 1193 [applying California law]; Gutierrez v. Givens (S.D. Cal. 1997) 989 F.Supp. 1033, 1044 [applying California law].)
In evaluating plaintiff’s claim under section 1714.10, subdivision (a), we affirm the trial court’s order. Plaintiff failed to submit competent evidence that he has an unsatisfied claim against the debtor, Momdjian, and is therefore entitled to relief under the UFTA. Plaintiff submitted evidence that he obtained a judgment, but no evidence that the judgment remains unsatisfied. He did not submit a copy of the judgment, or any other evidence reflecting the amount of the judgment. He submitted no evidence regarding his attempts to obtain satisfaction, and he submitted no evidence of the amount that remains unsatisfied. On the other hand, Treyzon declared in opposition to plaintiff’s petition that plaintiff converted his judgment to a lien against Momdjian’s house and purchased Momdjian’s house from Momdjian’s bankruptcy estate. One could reasonably infer that this resulted in the satisfaction of plaintiff’s judgment. Plaintiff submitted no evidence that he suffered any other type of compensable damage. Plaintiff therefore failed to establish a prima facie case, as required by section 1714.10, subdivision (a).
Plaintiff alluded to section 1714, subdivision (c) in oral argument before the trial court and before this court in response to an inquiry. Section 1714.10, subdivision (c) exempts a pleading from the requirement of pre-filing court approval set forth in section 1714.10, subdivision (a). Plaintiff’s petition in the trial court, however, was brought solely under section 1714.10, subdivision (a). Because plaintiff did not address expressly the application of section 1714.10, subdivision (c) in his moving papers below, or in Appellant’s Opening Brief, we choose not to deal with that issue. Nothing in this opinion, however, should be considered as precluding plaintiff from seeking leave of the trial court to file an amended complaint that is authorized by section 1714, subdivision (c). If plaintiff files a motion for leave to file an amended complaint that alleges a conspiracy within the scope of section 1714.10, subdivision (c), it is up to the trial court to determine whether to grant or deny such a motion.
Section 1714.10, subdivision (c) provides: “This section shall not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where (1) the attorney has an independent legal duty to the plaintiff, or (2) the attorney’s acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney’s financial gain.”
DISPOSITION
The order pursuant to section 1714.10 subdivision (a) denying plaintiff’s leave to amend is affirmed. The matter is remanded to the trial court for any further proceeding. The parties are to bear their own costs on appeal.
We concur: ARMSTRONG, Acting P. J.,KRIEGLER, J.