Opinion
G057126
06-30-2020
MESA WEST, INC., Plaintiff and Respondent, v. PHUSTAEROUS, LTD. et al., Defendants and Appellants.
Nathan D. LaMoure, in pro. per., for Defendants and Appellants. Vogt, Resnick, Sherak, LLP and Adam M. Greely for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2016-00877352) OPINION Appeal from a judgment of the Superior Court of Orange County, James L. Crandall, Judge. Affirmed. Nathan D. LaMoure, in pro. per., for Defendants and Appellants. Vogt, Resnick, Sherak, LLP and Adam M. Greely for Plaintiff and Respondent.
* * *
INTRODUCTION
In 2007, judgment was entered in favor of plaintiff Mesa West, Inc. (Mesa West) and against its former attorney Nathan D. LaMoure (LaMoure) and his firm Nathan D. LaMoure, a Professional Corporation (the LaMoure firm), awarding Mesa West reimbursement for its payment of over $900,000 in excessive legal fees. Since then, Mesa West has been diligently attempting to enforce that judgment, but those efforts have been thwarted by a series of transactions involving the LaMoure defendants, an entity called Phustaerous, Ltd. (Phustaerous) and Michael Weigold. In those transactions, defendants have purported to transfer interest in and place encumbrances upon real property located on Sea Island Drive in Newport Beach owned by LaMoure (the Sea Island property).
We refer to LaMoure and the LaMoure firm collectively as the LaMoure defendants.
We refer to LaMoure, Weigold, and Phustaerous collectively as defendants.
In 2016, Weigold, purportedly acting on behalf of Phustaerous as the holder of a trust deed, issued a notice of foreclosure sale on the Sea Island property. Mesa West filed the instant action against defendants, asserting claims for wrongful foreclosure, quiet title, declaratory relief, and injunctive relief. Following a bench trial, the trial court found defendants to have engaged in multiple fraudulent transactions with regard to the Sea Island property and judgment was entered in Mesa West's favor on all causes of action.
We affirm. We reject defendants' challenges to Mesa West's standing to enforce the 2007 judgment in the instant action for primarily the same reasons set forth in our prior opinion Mesa West, Inc. v. LaMoure et al. (Feb. 18, 2009, G038601) [nonpub. opn.] (Mesa West I). In that opinion, a panel of this court affirmed the 2007 judgment. In addition, substantial evidence supported the court's finding in favor of Mesa West on the wrongful foreclosure cause of action and the court's finding that Phustaerous was a sham entity that constituted LaMoure's alter ego.
As explained in part III of the Discussion post, pursuant to the California Code of Judicial Ethics, we are reporting LaMoure, defendants' counsel in this case, to the California State Bar for misconduct in the trial court and in this court on appeal.
FACTUAL AND PROCEDURAL BACKGROUND
The defendants' appellate opening brief (no reply brief was filed) is light on citations to the record. Most of the record citations contained in the parties' appellate briefs purport to cite trial exhibits which are not identified as such in the clerk's transcript, which exceeds 1,000 pages in length. No party has filed a notice seeking transmittal of exhibits pursuant to rule 8.224 of the California Rules of Court. On our own motion, we take judicial notice of prior opinions involving the parties in Mesa West I, supra, G038601 and In re Marriage of LaMoure (Sept. 9, 2015, E058817) [nonpub. opn.], the latter of which was admitted as trial exhibit No. 47 in the instant trial. (Evid. Code, §§ 452, subd. (d), 459, subds. (a) & (b).)
In 1971, Mesa West was incorporated as a California corporation. It manufactured equipment used for electroplating circuit boards, computer hard discs, and general electronics. LaMoure provided legal services to Mesa West from 1976 to 2003.
I.
1999-2004: MESA WEST AND THE LAMOURE DEFENDANTS ARBITRATE THEIR DISPUTE
OVER ATTORNEY FEES; THE LAMOURE FIRM ACQUIRES THE SEA ISLAND PROPERTY; AND
LAMOURE FILES FOR DIVORCE FROM HIS WIFE.
In 1999, Mesa West and the LaMoure defendants entered into an attorney-client contingency fee agreement in connection with the LaMoure defendants' representation of Mesa West in pursuing the latter's unfair practices claims against its insurer. (Mesa West I, supra, G038601.) Following Mesa West's settlement of its dispute with its insurer for $4.1 million, the LaMoure defendants demanded $2,065,535 for attorney fees and costs. (Ibid.) The LaMoure defendants also demanded Mesa West pay $35,236 for attorney fees and costs incurred in matters unrelated to the insurance unfair practices claims. (Ibid.) Mesa West refused to pay the LaMoure defendants the additional sums requested, and consequently $40,236 was placed in a trust account. (Ibid.)
Meanwhile, in August 2002, the LaMoure firm purchased the Sea Island property. (In re Marriage of LaMoure, supra, E08817.) In March 2003, LaMoure filed for dissolution of his 10-year marriage to Robin LaMoure. (Ibid.)
In May 2003, the LaMoure defendants sent Mesa West a notice of the right to arbitrate their fee dispute before the Mandatory Fee Dispute Arbitration Committee of the Orange County Bar Association. (Mesa West I, supra, G038601.) Mesa West retained new counsel to assist in the arbitration who advised Mesa West that the contingency fee agreement it had entered into with the LaMoure defendants did not comply with Business and Professions Code section 6147, subdivision (b) and was therefore voidable. (Ibid.) In June 2003, Mesa West filed a petition to arbitrate the fee dispute with the Orange County Bar Association which stated Mesa West elected to void the contingency fee agreement and further alleged that the fees it had already paid to the LaMoure defendants "exceed[ed] a reasonable fee to which [he was] entitled[.]" (Ibid.)
During the pendency of that action, in December 2003, Mesa West filed a certificate of corporate dissolution. Also, in 2004, Robin LaMoure recorded a lis pendens against the Sea Island property. (In re Marriage of LaMoure, supra, E058817.)
II.
2005-2006: MESA WEST FILES A COMPLAINT AGAINST THE LAMOURE DEFENDANTS TO
RECOVER EXCESSIVE ATTORNEY FEES; A TRUST DEED IS RECORDED IN FAVOR OF
LAMOURE ON THE SEA ISLAND PROPERTY.
After filing a request for a trial de novo of the arbitrators' ruling in the fee dispute issued in 2004, in April 2005, Mesa West filed a complaint seeking declaratory relief and return of the amount of attorney fees it paid to the LaMoure defendants under the contingency fee agreement that exceeded a reasonable fee for the LaMoure defendants' legal services. (Mesa West I, supra, G038601.) The LaMoure defendants filed a cross-complaint seeking $39,318 of the money held in the trust account. (Ibid.)
While the case was pending, in March 2006, a "Corporation Deed of Trust with Assignment of Rents" as to the Sea Island property was recorded; it had been executed by the LaMoure firm as trustor in favor of LaMoure, "individually, as beneficiary." Following trial in the attorney fee litigation, the trial court determined the contingency fee agreement was void in violation of Business and Professions Code section 6147 and several provisions of the Rules of Professional Conduct. (Mesa West I, supra, G038601.) The court concluded the sum of $364,110 constituted a reasonable fee for the LaMoure defendants' legal services. (Ibid.) The court added to the sum of legal fees the amounts paid by the LaMoure defendants to other attorneys and ordered the LaMoure defendants to reimburse the balance to Mesa West. (Ibid.) As for the LaMoure defendants' cross-complaint concerning the money held in trust, the court determined some of the debts owed by Mesa West were time-barred. (Ibid.) It ordered the parties to disperse $25,839 to the LaMoure defendants and $14,396 to Mesa West. (Ibid.)
III.
2007-2008: BENEFICIAL INTEREST IN THE TRUST DEED IS TRANSFERRED TO
PHUSTAEROUS; JUDGMENT IS ENTERED AWARDING MESA WEST $909,214.36
AGAINST THE LAMOURE DEFENDANTS; OWNERSHIP OF THE SEA ISLAND
PROPERTY IS TRANSFERRED TO LAMOURE.
Before judgment was entered in the fee litigation, in March 2007, an assignment by LaMoure to Phustaerous of the beneficial interest in the trust deed was recorded. In April 2007, judgment in the fee litigation was entered in favor of Mesa West and against the LaMoure defendants, awarding Mesa West $909,214.36 for disgorgement of attorney fees (the 2007 judgment). The LaMoure defendants appealed and, in June 2007, filed an undertaking to stay enforcement of the 2007 judgment pending appeal. (In re Marriage of LaMoure, supra, E058817.) The LaMoure defendants, acting as sureties, pledged real property which included the Sea Island property. (Ibid.)
Meanwhile, in July 2007, Mesa West recorded an abstract of judgment in Orange County. (In re Marriage of LaMoure, supra, E058817.)
While the LaMoure defendants' appeal of the 2007 judgment was pending, in December 2008, a transfer deed was recorded transferring ownership of the Sea Island property from the LaMoure firm to LaMoure as an individual. The transfer deed stated it was "a reconveyance of realty upon satisfaction of a debt"; that debt was purportedly the promissory note secured by a deed of trust dated January 12, 2006.
IV.
2009-2010: THE 2007 JUDGMENT IS AFFIRMED IN MESA WEST I; MESA WEST
COMMENCES ENFORCEMENT EFFORTS WHICH INCLUDES OBTAINING A WRIT OF
EXECUTION SEEKING TO LEVY THE SEA ISLAND PROPERTY.
In February 2009, a panel of this court affirmed the 2007 judgment in Mesa West I: "Unhappy with having to disgorge and reimburse to Mesa West more than $900,000 in fees, LaMoure's appeal attacks the judgment from every conceivable angle. We recognize LaMoure paid a high price by failing to comply with the rules designed to protect clients ([Bus. & Prof. Code,] § 6147), but we find no reason to disturb the court's judgment awarding LaMoure reasonable fees calculated by multiplying his normal billable rate ($240) for the documented hours he worked." (Mesa West I, supra, G038601.)
After the remittitur was issued in Mesa West I in April 2009, Mesa West commenced judgment enforcement proceedings. (In re Marriage of LaMoure, supra, E058817.) In November 2009, LaMoure executed and recorded a declaration of homestead on the Sea Island property. (Ibid.)
In January 2010, Mesa West recorded a certified judgment against the Sea Island property and obtained a writ of execution seeking to levy upon the Sea Island property, intending to apply the property sales proceeds to satisfy the 2007 judgment. (In re Marriage of LaMoure, supra, E058817.) In October 2010, the Orange County Superior Court issued an order to show cause regarding the sale of the Sea Island property but continued the order to show cause hearing regarding the Sea Island property, "in deference to the family court's determination of the characterization and assignment of the Mesa West judgment debt, and allocation of the Sea Island property sales proceeds." (Ibid.)
V.
2010-2013: MESA WEST JOINS THE LAMOURE MARITAL DISSOLUTION ACTION;
THE FAMILY COURT ORDERS THE SEA ISLAND PROPERTY SOLD AND
ORDERS CERTAIN SALE PROCEEDS TO BE PAID TO MESA WEST.
In November 2010, Mesa West filed a motion and declaration of joinder in the LaMoure marital dissolution action on the ground it held a judgment lien in the amount of $909,214.36; the 2007 judgment had been recorded in July 2007. In March 2010, the family court declared the Sea Island property community property, and in September 2010, notice of levy against the Sea Island property was recorded. (In re Marriage of LaMoure, supra, E058817.) Mesa West stated its intention to request an order for sale of the property. (Ibid.) As Robin LaMoure had recorded a lis pendens against the Sea Island property in 2004, title was clouded and the lis pendens needed to be expunged before Mesa West could proceed with its levy. (Ibid.)
In January 2013, the family court entered an order stating the court had found the Sea Island property to be community property; the value of the property at the time of LaMoure and Robin LaMoure's separation in February 2003 was $475,000; the Mesa West judgment entered in April 2007 and recorded in January 2010 against the Sea Island property was a community debt; and the Sea Island property should be sold. (In re Marriage of LaMoure, supra, E058817.) The family court also ordered that "the property sales proceeds were to be applied in the following order of priority: (1) payment of $175,000 in equal shares to Nathan [LaMoure] and Robin [LaMoure] under Code of Civil Procedure section 704.730 (homestead exemption); (2) reimbursement of costs to the levying officer; (3) payment of any remaining child support to DCSS, and (4) payment of the remaining judgment balance to Mesa West, as judgment creditor." (Ibid.) LaMoure appealed. (Ibid.)
VI.
2015-2016: PHUSTAEROUS AND WEIGOLD RECORD NOTICE OF DEFAULT ON THE TRUST
DEED; THE APPELLATE COURT AFFIRMS THE FAMILY COURT'S ORDER;
PHUSTAEROUS AND WEIGOLD RECORD A NOTICE OF TRUSTEE'S SALE AGAINST
THE SEA ISLAND PROPERTY.
On or about September 1, 2015, Phustaerous and Weigold, as trustee of the Phustaerous Deed of Trust, caused a notice of default and election to sell under deed of trust to be recorded against the Sea Island property. The following week, the appellate court affirmed the family court's January 2013 order, rejecting LaMoure's many contentions of error. (In re Marriage of LaMoure, supra, E058817.)
On August 27, 2016, Phustaerous and Weigold, as trustee of the Phustaerous deed of trust, caused a notice of trustee's sale to be recorded against the Sea Island property. The notice stated that a foreclosure sale was to take place at 12:00 p.m. on September 30, 2016, at the north entrance to the Orange County Superior Court in Santa Ana.
VII.
FALL 2016: MESA WEST INITIATES THIS WRONGFUL FORECLOSURE ACTION; THE TRIAL
COURT ISSUES A TEMPORARY RESTRAINING ORDER.
On September 26, 2016, Mesa West initiated this action against defendants, asserting claims for declaratory relief, injunctive relief, quiet title, and wrongful foreclosure as to the Sea Island property. On September 28, 2016, the trial court granted Mesa West's request for a temporary restraining order prohibiting defendants from (1) proceeding with the trustee's foreclosure sale; or (2) continuing with the nonjudicial foreclosure proceedings Phustaerous and Weigold had commenced regarding the Sea Island property; and (3) commencing any further act or proceeding to enforce any lien and/or encumbrance in favor of Phustaerous as against the Sea Island property. Notwithstanding the court's issuance of the temporary restraining order in LaMoure's presence, a trustee's deed upon sale, showing the property had been sold to Phustaerous itself, was recorded against the Sea Island property on September 30, 2016.
LaMoure would later represent to the court that he was unable to reach Weigold before the sale to inform him about the temporary restraining order and that the sale went forward. Mesa West's lawyer informed the court that he went to the location at the courthouse at the date and time noticed and found no one there and no sale to have taken place.
In November 2016, Mesa West filed the first amended complaint, its operative pleading, for declaratory relief, injunctive relief, and quiet title against Phustaerous, Weigold, in his individual capacity and as trustee under trust deed in favor of Phustaerous, and LaMoure; it also contained a wrongful foreclosure cause of action against Weigold and Phustaerous. According to the amended complaint's introductory statement: "This action seeks to quiet title to [the Sea Island property], and to enjoin a wrongful foreclosure sale. Plaintiff, Mesa West, Inc., holds a Judgement Lien on the real property. Defendants, including Nathan D. LaMoure and Michael S. Weigold, have conspired together and attempted to cloud title and orchestrate a fraudulent foreclosure on a deed of trust in favor of a fictitious entity named 'Phustaerous, Ltd.,['] in a continuing effort to thwart Mesa West Inc.'s efforts to collect on a Judgment with an outstanding balance of more than $1.8 Million. The Mesa West Judgment arises from a finding that LaMoure improperly charged and received almost $1 Million in legal fees from Mesa West, Inc., which he has been ordered to repay."
In the prayer for relief, Mesa West sought (1) a judicial declaration that the Phustaerous Deed of Trust was void against the Sea Island property, (2) an injunction against the continuation of the pending nonjudicial foreclosure proceeding against the Sea Island property, (3) an order quieting title in the real property in the name of LaMoure as the owner of the property, free and clear of any rights, claims, liens, and/or encumbrances in favor of the defendants except for the Mesa West judgment lien, and (4) consequential damages, costs, and attorney fees.
VIII.
MARCH-JUNE 2017: THE TRIAL COURT ISSUES A PRELIMINARY INJUNCTION, CONDUCTS
THE BENCH TRIAL IN THE INSTANT ACTION, AND ISSUES ITS ORAL
STATEMENT OF DECISION.
In March 2017, the trial court granted Mesa West's request for a preliminary injunction. The court stated, "[i]n Order to ensure that the Defendants do not engage in any further shenanigans," defendants were not only enjoined from taking further action to foreclose upon the subject deed of trust as requested by Mesa West, but also that "Defendants, and each of them, may not transfer, assign, sell, encumber, or hypothecate the Property without leave of court, pending resolution of this action on the merits. While the motion does not expressly request this order, it is necessary to preserve the property, pending resolution of this action on the merits."
A bench trial occurred over the course of 10 days in the months of March and June 2018. The trial court announced orally its tentative statement of decision on June 13, 2018.
In the middle of trial, after the trial court denied defendants' motion for nonsuit, and three days before trial was scheduled to be completed, on March 16, 2018, LaMoure filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court, triggering an automatic stay. On April 24, 2018, the Bankruptcy Court dismissed LaMoure's bankruptcy case due to his failure to file the required bankruptcy schedules and statement of financial affairs. Due to the trial court's schedule, trial could not resume until June.
We quote the court's oral statement of decision almost in its entirety because much of it is relevant to the issue of LaMoure's misconduct in the litigation discussed in section III of the Discussion, post.
The court's oral statement of decision began: "Having heard all the evidence, for six or seven or eight days, even though it's been over a number of months and having considered all the documents admitted into evidence and the testimony of the witnesses, it's very . . . clear that this case boils down to an issue of credibility." The court continued: "In the defense of this case, Mr. LaMoure has spent all his time looking for some technical defect in the status of the plaintiff; the standing of the plaintiff; the timing and filing of the lawsuit; defects in the judgment; defects in the abstract of judgment; . . . defects in renewal of the judgment. He's even inquired into the validity of the trust and the wills of Paul Stubb, Jr., and Mrs. Barbara Stubb.
Paul Stubb, Sr., was a cofounder, president, and a director of Mesa West; Barbara Stubb and Paul Stubb, Jr., were also directors. Paul Stubb Sr. and Barbara Stubb are now deceased.
"Everything I heard from the defense was some technical procedural defect, rather than some substantive testimony to say the plaintiff's claim is invalid or that these documents are legally valid.
"It's clear to the court that Mr. LaMoure's machinations and tactics and legal maneuvers to avoid payment of this judgment, which is now 10 years old; to avoid payment of the spousal support, from the San Bernardino County Court; to avoid payment of child support, from the San Bernardino County Court; and to avoid resolution of the judgment that he has against him . . . can only be described as a game of hide and seek.
"Mr. LaMoure has used his legal knowledge and abused his legal skills . . . to engage in what I can best describe as a shell game. He's moved title around, when it suited him, to avoid paying somebody. He actually stated, in the San Bernardino County Court case, that's actually cited by Judge Pacheco, that . . . [¶] 'It's abundantly clear that, not only did Petitioner fail to disclose his financial dealings, as required under Family Code 2102 and 11018. But it appears he manipulated what evidence and documents he did provide to artificially alter his actual state of financial affairs. All with the single-minded goal of not wanting to pay respondent a single dime.'
The trial court further noted: "A repeated mantra echoed, by [LaMoure], throughout these proceedings."
The court continued, stating LaMoure was not credible which was the "basis of [the court's] decision, that his testimony, his documents are . . . lacking in credibility." The court found that a purported promissory note secured by the deed of trust by LaMoure had no factual support in the case: "I didn't see credible evidence that Mr. LaMoure had actual . . . debts. . . . [¶] . . . I see no documentation from anybody to whom he owed this money and no underlying support" and found exhibit 16 "invalid, unenforceable and a fraudulent document for the purpose of avoiding judgment."
The parties' joint exhibit list describes exhibit 16 as "Promissory Note Secured by Deed of Trust."
The court found that the deed of trust with assignment of rents was a contrivance "[a]nd again, as far as of his shell game, to avoid the judgment." The court's oral statement of decision continued: "I think it's important that exhibit 18 shows that the assignment of beneficial interest in the deed of trust was assigned from Mr. LaMoure to Phustaerous. And that's March 20, 2007, when it was made out and signed. And that's right after the trial with Judge Margines, where Judge Margines expressed an intent to enter judgment in favor of Mesa West. [¶] So what does Mr. LaMoure do? He assigns it off, another shell game. [']I'm gonna hide my assets, so the judgment creditor can't find it.' I find that to be . . . invalid and unenforceable.
"Also, I think it's important that this court issued a TRO in this case. This clearly goes to credibility. And the evidence in this case is that Mr. LaMoure was here, the day I issued the TRO. [Mesa West's counsel] said Mr. LaMoure is downstairs, while we were waiting, where he was actually representing Mr. Weigold, as a trustee in some other matter.
"And, then, Mr. LaMoure comes into court and says, 'I never told Weigold about the TRO and I couldn't get ahold of him and Weigold sold the property without notice of the TRO.' Not believable.
"As a lawyer for Mr. Weigold or even in his capacity as a trustee, on the very day that I grant the TRO, there's simply no credibility to anyone [who] says, 'I didn't tell Mr. Weigold about your TRO.'
"So—I'm entering judgment for the plaintiff, as to the declaratory relief, as to the injunctive relief; and as to wrongful foreclosure.
"I—as to the quiet title action, I think I need to quiet title in Mr. LaMoure, personally. Because I'm voiding the transfer to Phustaerous. So, I find that this transfer deed [dated March 2007] is void, unenforceable and a fraud."
The court continued: "I mention 'credibility.' I think it's important that every judge who's heard any aspect of this case that Mr. LaMoure has [appeared] before has found him to be not believable. [¶] . . . [¶] I think it's very telling that—that [LaMoure's] examination under oath . . . the question was:
"What is 'Phustaerous, Ltd'?
". . . Answer: It was a private lender.
"Question: What is your relationship to this company?
"He says, 'None.'
"We have clear evidence that he was the . . . forming lawyer, through Phustaerous; and transferred assets in and out of it, over the years; and managed it, for his brother—as he said, for his brother. But it's clear, from the evidence, that's not true. I don't believe that testimony.
"Mr. LaMoure managed Phustaerous, solely for his own purpose, to move assets in and out as part of . . . his shell game to avoid paying his wife; the County of San Bernardino; child support and, of course, Mesa West."
The court stated it found Weigold's testimony "beyond preposterous," including his testimony that he did not receive notice of the trial court's temporary restraining order barring the trustee sale, that he conducted the trustee sale of the Sea Island property as noticed and no one was there, and that Phustaerous was the good faith purchaser of the Sea Island property at that sale.
The court added that "when I consider all the evidence, I . . . have to say this was just . . . a complicated series of transactions by a very experienced lawyer, who sadly, over the years has learned to use his legal knowledge as a means of gaming the system in a way to avoid paying his debts." The court cited a recent newspaper article summarizing the case of an attorney who was disbarred, the facts of which the court thought were "very close to this case."
The court found Phustaerous was LaMoure's alter ego and concluded: "He created it solely as a guise, as a disguise for his own property so it would be . . . safe from judgment creditors. [¶] So . . . I grant the relief requested by plaintiff. I do find that the action, by Mr. Weigold, was a wrongful foreclosure; that Mr. LaMoure is a coconspirator in that wrongful foreclosure. And I believe, under the wrongful foreclosure law, that the plaintiff is entitled to attorney's fees. And pursuant to discussion with counsel, during final argument, we'll reserve that issue for a post-judgment motion."
Mesa West declined the court's invitation to prepare a different statement of decision, stating "the transcript will serve as a statement of decision." As no party otherwise requested a statement of decision, the court ordered a further statement of decision waived. The court overruled the defendant's objections to the oral statement of decision and to the proposed judgment prepared by Mesa West. Defendants do not argue on appeal the trial court erred by overruling those objections.
IX.
JUDGMENT
In October 2018, judgment was entered in favor of Mesa West and against defendants as to each cause of action in the amended complaint. The court's judgment contained the following findings: "Phustaerous, Ltd, the California limited partnership purportedly formed in or about 1984 is deemed to be a sham, and is the alter-ego of Nathan D. LaMoure.
"The Corporation Deed of Trust with Assignment of Rents dated November 30, 2005, and thereafter recorded on March 15, 2006, in the Official Records of the Orange County Recorder as Instrument No. 2006000169678 (the 'Deed of Trust') executed by Nathan D. LaMoure, a Professional Corporation, as Trustor to Defendant Nathan D. LaMoure, individually, as beneficiary with regard to the [Sea Island property], any assignments thereof, and any and all obligations secured thereby are deemed to be a fraud, a sham and are void and unenforceable.
"The March 23, 2007, Assignment of Beneficial Interest in Deed of Trust recorded in the Official Records of the Orange County Recorder as Instrument No. 2007000189192 with regard to the [Sea Island property], assigning to Defendant Phustaerous Ltd. the beneficial interest of Nathan D. LaMoure, a Professional Corporation, in that certain Deed of Trust is deemed to be a fraud and void and unenforceable.
"The Notice of Default and Election to Sell Under Deed of Trust recorded against the [Sea Island property] as Instrument No. 2015000451972 on or about September 1, 2015 with respect to the Deed of Trust is deemed to be a fraud, sham and is void and of no force or effect.
"The Notice of Trustee's Sale recorded as Instrument No. 2016000413494 in the County Recorder's Office in Orange County, on or about August 30, 2016, is deemed to be a fraud, a sham and is void and of no force or effect.
"The Trustee's Deed Upon Sale recorded against the [Sea Island property] in the County Recorder's Office in Orange County, on or about September 30, 2016 as Instrument No. 2016000478009 is deemed to be a fraud, a sham and is void and of no force or effect.
"The Order for Sale of Real Property—[the Sea Island property] entered on January 9, 2013 in the Case of In re Marriage of Nathan LaMoure and Robin LaMoure, San Bernardino Superior Court Case No. SBFSS71194 (Exhibit '42' admitted at trial in the present case), as clarified or amended by that certain Minute Order entered [in] Case No. SBFSS71194 on September 23, 2016 (Exhibit '56' admitted at trial in the present case) remains in full force and effect and the Sheriff is Ordered to carry out the Sale of the Real Property pursuant to said Order as clarified.
"In addition, Judgment for money damages shall be and hereby is awarded in favor of Plaintiff Mesa West, Inc., and against Defendants, Phustaerous Ltd, a California limited partnership, Michael S. Weigold, aka Michael Scott Weigold aka M.S. Weigold, individually and as trustee under the certain Deed of Trust in favor [of] Phustaerous Ltd, and Nathan D. LaMoure, an individual, and each of them, jointly and severally for attorneys fees and costs in the sum of $TBD (to be determined by subsequent motion of Plaintiff) as consequential damages." (Some capitalization omitted.)
Defendants appealed.
DISCUSSION
I.
FOR THE SAME REASONS EXPLAINED IN MESA WEST I, MESA WEST HAS STANDING TO
PROSECUTE THIS ACTION TO ENFORCE THE 2007 JUDGMENT.
Defendants contend that, because Mesa West filed a certificate of dissolution in December 2003, it did not have standing to file the instant action in September 2016. The Mesa West I court addressed and rejected a similar standing argument. We summarize the Mesa West I court's analysis as follows.
The scope of permissible activities by a dissolved corporation is provided in Corporations Code section 2010: "(a) A corporation which is dissolved nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it[,] and enabling it to collect and discharge obligations, dispose of and convey its property[,] and collect and divide its assets, but not for the purpose of continuing business except so far as necessary for the winding up thereof. [¶] (b) No action or proceeding to which a corporation is a party abates by the dissolution of the corporation or by reason of proceedings for winding up and dissolution thereof. [¶] (c) Any assets inadvertently or otherwise omitted from the winding up continue in the dissolved corporation for the benefit of the persons entitled thereto upon dissolution of the corporation and on realization shall be distributed accordingly." (Italics added.)
In Peñasquitos, Inc. v. Superior Court (1991) 53 Cal.3d 1180 (Peñasquitos), the California Supreme Court explained that the resolution of claims based on predissolution conduct is a permissible part of the winding up process occurring after dissolution. (Id. at pp. 1183-1184.) "California's statutory scheme, which is similar to provisions in several other states, authorizes the continuance of 'corporate existence indefinitely for the purpose of winding up and settling the affairs' of the dissolved corporation. [Citation.] Consequently, under the statutory scheme, 'the effect of dissolution is not so much a change in the corporation's status as a change in its permitted scope of activity.' [Citation.] 'Thus, a corporation's dissolution is best understood not as its death, but merely as its retirement from active business.'" (Mesa West I, supra, G038601, quoting Peñasquitos, supra, 53 Cal.3d at pp. 1185, 1190, italics added.)
The appellate court in Mesa West I concluded: "Mesa West's arbitration proceedings and related lawsuit concerned the winding up of its business. Essentially, the purpose of both actions was for Mesa West to protect and recoup settlement money from [the LaMoure defendants]. Mesa West's initial objective in arbitration was to protect money held in the trust account from LaMoure. The goal expanded when it filed its own arbitration petition seeking to recoup money already paid to LaMoure and it made the express election to void the contingency fee contract and recoup overpaid fees. The lawsuit was filed before Mesa West filed its certificate of dissolution. As expressly stated in Corporations Code section 2010, subdivision (b), 'No action or proceeding to which a corporation is a party abates by the dissolution of the corporation or by reason of proceedings for winding up and dissolution thereof.' We conclude Mesa West had standing to prosecute and defend the arbitration."
The Mesa West I court further concluded the LaMoure defendants had misconstrued the record and applicable legal authority in arguing Mesa West did not have standing to file a new action to void a pre-dissolution contract on the ground a corporation cannot sue for an obligation unknown on the date of dissolution: "First, LaMoure's argument is contrary to Corporations Code section 2010, subdivision (c), which provides . . . dissolved corporations have the express statutory authority to collect and distribute assets discovered after the date of dissolution as long as it is deemed part of the winding up process. [¶] More importantly, the record indicates Mesa West discovered its right to recoup the excessive attorney fees paid under a void contract during the arbitration proceedings and pre-dissolution. The fact efforts to disgorge the unreasonable fees continued after dissolution, and required legal proceedings after the arbitration finished, is irrelevant. '[A] dissolved corporation maintains considerable corporate powers to conduct whatever business is required to wind up its affairs—including prosecuting actions and enforcing judgments. [Citations.]' (Timberline Inc. v. Jaisinghani (1997) 54 Cal.App.4th 1361, 1368-1369, citing Peñasquitos, supra, 53 Cal.3d at p. 1185.) We find no authority suggesting a dissolved corporation cannot collect money it overpaid to an attorney before its date of dissolution. If the roles were reversed, and it was LaMoure claiming the dissolved corporation owed him additional fees incurred pre-dissolution, Peñasquitos would support his right to maintain a lawsuit against a dissolved corporation. Similarly, under the case authority and statutory scheme, dissolved corporations have the right to pursue and collect these fees/assets as part of its efforts to wind up its affairs. We conclude Mesa West had 'standing' to file the lawsuit to recover attorney fees it was owed." (Italics added.)
The instant action, initiated with Mesa West filing the September 2016 complaint, is the continuation of Mesa West's efforts to collect the same attorney fees it overpaid LaMoure upon which the trial court entered the 2007 judgment in the attorney fees litigation. Defendants' argument that Mesa West has lost standing to continue its extensive efforts to enforce that judgment and collect money the LaMoure defendants have failed to pay to satisfy that judgment is without any reasonable basis and is directly contradictory to the law set forth in Mesa West I, including that dissolved corporations have an indefinite period of time to wind up their affairs. If defendants were correct that Mesa West is unable to file an action to enforce the 2007 judgment, Mesa West's ability to collect on the LaMoure defendants' obligation as authorized by Corporations Code section 2010, subdivision (c) would be significantly limited if not completely barred in contravention of that statute, particularly in light of the LaMoure's inexhaustible efforts to resist such enforcement.
Without citing to the appellate record, defendants assert that at some point before his death, Mesa West founder, president, and director Paul Stubbs, Sr., had testified that he was the sole shareholder and director of Mesa West and also that he had distributed all of Mesa West's assets to himself. Therefore, defendants assert, Mesa West is without standing to enforce the judgment in this action, rendering this action moot. Defendants have not only failed to provide support in the record for the factual assertions underlying their argument, they have provided no citations to relevant legal authority or analysis to support their argument.
In any event, section 2001, subdivision (b) of the Corporations Code provides that after dissolution, the "powers and duties of the directors" include continuing "the conduct of the business insofar as necessary for the disposal or winding up thereof." Substantial evidence showed Paul Stubb, Jr., has been a director of Mesa West from the filing of the certificate of dissolution through the time of the instant trial and thus had authority to direct actions related to enforcing the 2007 judgment on behalf of Mesa West. (See Favila v. Katten Muchin Rosenman LLP (2010) 188 Cal.App.4th 189, 212 ["a vacancy in the board of directors after dissolution and during windup proceedings may be filled by the shareholders if not filled by the remaining directors"].)
In the respondent's brief, citing trial exhibits 94 and 95 (which were not transmitted to our court), Mesa West also points out that in February 2018, Paul Stubbs, Jr., was issued letters of administration as appointed administrator or personal representative of the estates of both his father Paul Stubbs, Sr., and his mother Barbara Stubb. As administrator of the estates of his parents, who were shareholders of Mesa West, Paul Stubbs, Jr., succeeded to their voting rights. (See Corp. Code, § 702, subdivision (a) ["shares held by an administrator, executor, guardian, conservator or custodian may be voted by such holder either in person or by proxy, without a transfer of such shares into the holder's name"].)
Defendants also argue the trial court erred by finding Mesa West had standing to "renew the underlying judgment lien and sue in 'winding up' after 15 years [because it was] barred by an applicable statute of limitations and laches." (Some capitalization omitted.) Defendants concede in their appellate brief there is no statute of limitations for winding up a corporation and that section 2010 of the Corporations Code authorizes a "continued existence to defend and prosecute actions [that] is indefinite as to time." They nevertheless argue "[i]t is hard to suppose that the legislature intended to provide an indefinite and unlimited . . . time to 'wind up' by lawsuit or otherwise."
In addition to suggesting that this court judicially create a statute of limitations in their favor, they argue Mesa West is otherwise deprived of standing by operation of the doctrine of laches due to Mesa West's delay in filing in the instant enforcement action. Defendants' argument is quite bold. Mesa West continues to pursue enforcement of the 2007 judgment because the LaMoure defendants have successfully avoided satisfying it to date. Even if defendants' laches argument had support in any relevant legal authority (defendants offer none), our record is replete with evidence of Mesa West's consistent and extensive efforts, including intervening in LaMoure's marital dissolution case, to collect the LaMoure defendants' debt since the 2007 judgment was originally entered.
Defendants further argue that the trial court erred by finding Mesa West has "standing to enforce, renew and sue on its judgment lien." (Some capitalization omitted.) They argue "[w]ith no judgment creditor that exists, and no power to enter into contracts, and no existing attorney of record for it, how can the judgment be renewed by a new attorney of record." They concede "[a] renewal application [was] indeed made on the Underlying Judgment," but argue "[t]o re[n]ew a lien, however, the Judgment creditor must also serve a certified copy of the application for renewal before the expiration of the lien" and insufficient evidence showed this had been done.
Defendants do not cite to the portion(s) of the record where these issues were raised and addressed by the parties and the trial court. They provide no facts regarding the timing, substance, or service of any judgment renewal applications in support of their arguments. In any event, our review of the record shows that at the time of the wrongful foreclosure sale, the 2007 judgment was not yet 10 years old and thus not yet due for renewal. (See Code Civ. Proc., § 683.020 [money judgment enforceable for 10 years].) We find no error.
II.
SUBSTANTIAL EVIDENCE SUPPORTED THE TRIAL COURT'S FINDINGS OF WRONGFUL
FORECLOSURE AND THAT "PHUSTAEROUS WAS A 'SHAM'" AND LAMOURE'S ALTER EGO.
Defendants contend insufficient evidence supported the court's findings in favor of Mesa West on the wrongful foreclosure cause of action against Weigold and Phustaerous, and that Phustaerous was an alter ego of LaMoure. We disagree.
"'When a trial court's factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination, and when two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court. If such substantial evidence be found, it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion.'" (Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th 138, 143, italics omitted.) It is the province of the trier of fact to make credibility determinations. (Nestle v. City of Santa Monica (1972) 6 Cal.3d 920, 925-926.)
A.
Substantial Evidence Supported the Findings of Wrongful Foreclosure.
The elements of a tort cause of action for wrongful foreclosure are: "'(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.'" (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408-409.)
Substantial evidence showed Weigold's efforts, purportedly on behalf of Phustaerous, to conduct a foreclosure sale of the Sea Island property were illegal and fraudulent. First, the purported foreclosure sale took place in violation of a temporary restraining order enjoining such a sale; the trial court did not believe testimony that Weigold had not been notified of the temporary restraining order before the noticed date and time of the purported sale. Second, substantial evidence showed no public foreclosure sale occurred as noticed. Mesa West's attorney testified that he appeared at the time and place of the noticed foreclosure sale and did not see Weigold or anyone else there; the trial court found Mesa West's attorney's testimony to be credible. Nevertheless, a trustee's deed of sale dated September 30, 2016 (the noticed date of the sale) was recorded as to the Sea Island property that same day.
More than substantial evidence supported the court's finding that Mesa West, as the party attacking the sale, was prejudiced or harmed by the illegal and fraudulent sale going forward. The Sea Island property was valued at $475,000 in 2003. Even if the Sea Island property had not increased in value since then, based on the family court's order prioritizing proceeds from the sale of that property, Mesa West had the opportunity to collect up to $300,000 on the 2007 judgment if the property had been placed for sale as ordered by the court. Defendants do not dispute that if the illegal and fraudulent foreclosure sale on the Phustaerous trust deed was allowed to stand, Mesa West would recover nothing on its interest in the Sea Island property.
Defendants' substantial evidence challenge to the court's wrongful foreclosure finding is primarily trained on a line of cases that hold "before a junior lienor may set aside a nonjudicial foreclosure of real property under a deed of trust because of irregularities in the sale, the junior lienor must first tender the full amount owing on the senior obligation." (Arnolds Management Corp. v. Eischen (1984) 158 Cal.App.3d 575, 577.) Citing that case and others, defendants argue that, in the absence of evidence Mesa West offered full tender on the amount owed on the Phustaerous trust deed, its wrongful foreclosure claim fails. But the record, and in particular the family court's January 2013 order, affirmed by the appellate court and incorporated into the wrongful foreclosure judgment appealed from in this case, establishes that Mesa West is not a junior lien holder to the Phustaerous trust deed. That order establishes Mesa West's interest in the Sea Island property is junior only to the homestead exception distribution in the amount of $175,000 to LaMoure and Robin LaMoure, any money owed to the levying officer, and any amount of outstanding child support, of which LaMoure asserts in his appellate brief there is none. Therefore, Mesa West was not required to offer tender to Phustaerous and Weigold to establish its wrongful foreclosure claim against them.
B.
Substantial Evidence Supported the Trial Court's Finding that Phustaerous Is a Sham
Entity and the Alter Ego of LaMoure.
Defendants argue "[t]he trial court's finding that Phustaerous was a 'sham' of [LaMoure] constituted reversible error." (Some capitalization omitted.) Substantial evidence supported the court's finding.
That Phustaerous has been used for years as LaMoure's vehicle to place the Sea Island property out of Mesa West's reach in its efforts to collect on the 2007 judgment is evidenced by the history of defendants' participation in transfers of and encumbrances upon the Sea Island property in response to Mesa West's attempts at levying on the Sea Island property. After the trial court announced its decision in the fee litigation in favor of Mesa West but before the 2007 judgment was entered, an assignment of beneficial interest in the trust deed was recorded, by which LaMoure assigned all his beneficial interest in the Sea Island property to Phustaerous "[f]or value received." The trial court found that LaMoure did not have any debt that would support this transfer of interest; defendants do not address this finding in their appellate brief.
The same month that the appellate court in In re Marriage of LaMoure, supra, E058817 affirmed the family court's order directing the sale of the Sea Island property in part to satisfy the 2007 judgment, a notice of default and election to sell the Sea Island property under the deed of trust by Phustaerous was recorded. The notice stated it was given by Phustaerous through "its duly appointed Trustee M. S. Weigold under a Deed of Trust dated 11/30/2005 executed by Nathan D. LaMoure A Professional Corporation as Trustor to secure an original indebtedness of $739,000.00 in favor of Nathan D. LaMoure . . . and which beneficial interest of Nathan D. Lamoure under the deed of trust was assigned to Phustaerous."
In August 2016, Phustaerous's notice of trustee's sale stated that due to a default on the trust deed, on September 30, 2016 at 12:00 p.m. the Sea Island property would be sold at public auction to the highest bidder for cash, cashier's check or cash equivalent at the north entrance of the "County Superior Court Courthouse 700 Civic Center Drive West, Santa Ana." On September 28, 2016, Mesa West secured a temporary restraining order enjoining that trustee's sale; LaMoure was present in court that day and represented that he was also appearing that day in another courtroom on Weigold's behalf. Nevertheless, LaMoure represented to the trial court that he was unable to communicate to Weigold that the temporary restraining order had been issued and the trustee's sale purportedly went forward. In the appellate opening brief, defendants affirm: "On 9/30/201[6], a Trustee's sale was conducted and a Trustee's Deed Upon Sale to Phustaerous was recorded with the Orange County Recorder." Mesa West's attorney, however, appeared at the north entrance of the courthouse on September 30, 2016 at noon and did not find Weigold, or any other person there for the purported trustee's sale. The court found Mesa West's attorney to be credible, and the testimony of LaMoure and Weigold to be preposterous.
The trial court also cited LaMoure's false prior testimony that he had no relationship with Phustaerous in support of its finding that Phustaerous was a sham and alter ego of LaMoure. Defendants do not address that false testimony in their appellate brief. Instead, they purport to cite other evidence (specifically, trial court exhibits that were not transmitted to this court), they contend shows that another attorney was involved in the formation of Phustaerous and that LaMoure did not become involved until years later. Even if that evidence were before us, that evidence is not inconsistent with the court's finding that LaMoure was behind the formation of Phustaerous and has since used that entity as a vehicle to avoid his obligation under the 2007 judgment. We find no error.
"It is the appellant's burden, not the court's, to identify and establish deficiencies in the evidence. [Citation.] This burden is a 'daunting' one. [Citation.] 'A party who challenges the sufficiency of the evidence to support a particular finding must summarize the evidence on that point, favorable and unfavorable, and show how and why it is insufficient. [Citation.]' [Citation.] '[W]hen an appellant urges the insufficiency of the evidence to support the findings it is his duty to set forth a fair and adequate statement of the evidence which is claimed to be insufficient. He cannot shift this burden onto respondent, nor is a reviewing court required to undertake an independent examination of the record when appellant has shirked his responsibility in this respect.'" (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 409, italics omitted.)
III.
MISCONDUCT BY LAMOURE
Business and Professions Code section 6068, subdivision (d) provides that it is the duty of an attorney to "[t]o employ, for the purpose of maintaining the causes confided to him or her those means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law." Our record shows several respects in which LaMoure has violated his duty under this statute in his capacity as counsel for defendants in the instant action. LaMoure violated his duty by, inter alia, offering false testimony and statements such as that he had no relationship with Phustaerous and was unable to inform Weigold about the trial court's temporary restraining order enjoining the foreclosure sale before the noticed date. He elicited Weigold's false testimony that Weigold conducted the foreclosure sale at the time and place noticed. He also proffered and relied upon as evidence, in the trial court and on appeal, documents fraudulently purporting to be instruments transferring interest in and encumbering the Sea Island property in an effort to avoid Mesa West's lawful efforts to enforce the 2007 judgment. We report LaMoure to the State Bar of California for this misconduct and all the other misconduct detailed in this opinion.
Canon 3D(2) of the California Code of Judicial Ethics provides: "Whenever a judge has personal knowledge, or concludes in a judicial decision, that a lawyer has committed misconduct or has violated any provision of the Rules of Professional Conduct, the judge shall take appropriate corrective action, which may include reporting the violation to the appropriate authority." Pursuant to canon 3D(2) of the California Code of Judicial Ethics, we hereby report Nathan D. LaMoure, counsel for defendants, to the State Bar of California for his misconduct.
DISPOSITION
The judgment is affirmed. Respondent shall recover costs on appeal. The clerk of this court is directed to send a copy of this opinion to the State Bar of California. The clerk is further directed to send a copy of this opinion to Attorney Nathan D. LaMoure, State Bar No. 45478, at his address listed by the State Bar.
FYBEL, J. WE CONCUR: O'LEARY, P. J. MOORE, J.