Altisource Solutions v. Quick Home Restore
Filed 1/29/14
CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
face="Times New Roman">
face="Times New Roman">
face="Times New Roman">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 This opinion has not been
certified for publication or ordered published for purposes of rule 8.1115.
face="Times New Roman">
IN THE COURT OF APPEAL OF THE STATE OF
FOURTH APPELLATE DISTRICT
DIVISION TWO
face="Times New Roman">
face="Times New Roman">
ALTISOURCE
SOLUTIONS, INC.,
face="Times New Roman">Plaintiff and Respondent,
v.
QUICK HOME
RESTORE et al.,
face="Times New Roman">Defendants and Appellants.
face="Times New Roman">E055902
face="Times New Roman">(Super.Ct.No. RIC1119073)
OPINION
face="Times New Roman">
face="Times New Roman">APPEAL from the
art. VI, § 21.) Affirmed.
face="Times New Roman">Zulu Ali for Defendants and Appellants.
face="Times New Roman">Houser & Allison, Eric D. Houser, and
Joshua D. Watts for Plaintiff and Respondent.
This
action reaches us at a very rudimentary stage.
Plaintiff Altisource Solutions, Inc. (Altisource) filed a complaint
accusing defendants of fraud and breach of
contract. Simultaneously, it applied
for a right to attach order,
which the trial court granted against some defendants and denied against
others. The facts are murky; there has
been no discovery yet; and both sides have inexplicably failed to introduce
evidence that one would have expected them to introduce.
It
is not even clear how many appellants there are. The notice
of appeal was filed on behalf of defendants Quick Home Restore (QHR) and
S&H Global Trades, LLC (S&H). There
is some evidence that QHR is merely a “dba†name of S&H and has no separate
existence. However, there is also some contrary
evidence that QHR may be a separate entity.
The opening brief asserts that these two entities are one and the same,
but the attached Certificate of Interested Entities or Persons suggests
otherwise. We will use the term
“appellants†to encompass both QHR and S&H collectively.
In
this appeal, appellants contend that the trial
court erred by issuing a right to attach order against them because:
1. Altisource failed to carry its burden of
showing the probable validity of its breach of contract claim.
2. The trial court shifted the burden of proof
by requiring defendants to produce evidence.
We
find no error. Hence, we will affirm.
face="Times New Roman">I
face="Times New Roman">FACTUAL BACKGROUND
The
following facts are taken from the declarations filed in support of and in
opposition to the application for a right to attach order.
face="Times New Roman">A.
Altisource
submitted the declaration of Tara Williams, its Vice President of Field
Services.
Williams
testified that Altisource is in the business of maintaining and selling
foreclosed properties. Altisource
contracts with outside vendors to do maintenance work on its properties,
including repairs, painting, and
In
January 2011, QHR applied to Altisource to become an approved outside vendor. According to the application, the principals
in QHR were Shahid Jalal and Ronald Singh.
QHR had a face="Times New Roman">California
license. QHR represented that it had no
employees and no independent contractors.
Altisource approved the application.
It
was Altisource’s policy not to ask for backup documentation for invoices of
$500 or less. QHR was aware of this
policy.
In
October 2011, QHR submitted invoices totaling $172,786, supposedly for work
done on Altisource properties in 26 states and the
$500. The invoice amounts were
repetitive — they were all for either $350, $395, $450, $465, $475, $485, $499,
or $500. There were multiple invoices
for work done on the same property. For
example, QHR submitted six separate invoices, each for work supposedly done on
a property on face="Times New Roman">11th Avenue
$485, $500, $485, $395, $465, and $499.
QHR
also claimed to have done work in multiple states on the same day.
dated face="Times New Roman">July 1, 2011
properties in face="Times New Roman">California
7, 2011,
for work on a total of 20 properties in nine states.
Altisource
realized that the invoices were for work supposedly done after the properties
had already been sold to third parties. It
therefore asked QHR for supporting documentation. QHR responded that it could not provide the
documentation because of a “computer malfunction.â€
At
that point, Altisource stopped making payments on the invoices. Meanwhile, however, it had already paid QHR
$120,024.
face="Times New Roman">B.
Defendants
submitted the declaration of Shahid Jalal, who testified that he was the
“owner†of QHR.
According
to Jalal, Altisource requires vendors to submit invoices via its website. However, a vendor cannot submit an invoice
until Altisource has set up a work order on its website.
Between
June and August 2011, Altisource
Varghese, an employee of Altisource. QHR
“completed the work orders per the requests made by Altisource.†However, QHR could not submit invoices for
those work orders until October 2011, which was when Altisource finally set up
the work orders on its website. Jalal
testified that “[a]ll the invoices submitted . . . were for work that
was completed prior to October 2011.â€
When
Altisource asked for backup documentation, QHR could not provide it because the
hard drive of its computer had crashed. However,
Jalal did tell Altisource that Varghese should have emails and other
documentation.
face="Times New Roman">II
face="Times New Roman">PROCEDURAL BACKGROUND
Altisource
filed this action against seven named defendants, including QHR and S&H,
asserting causes of action for breach of contract, fraud, and money had and
received, among other things. At the
same time, it filed an application for a right to attach order against all
defendants.
Defendants
filed an opposition to the application. They
argued, among other things, that Altisource had not shown the probable validity
of its claim.
At
the hearing on the application, counsel for defendants argued that there was no
evidence that any of the defendants other than QHR and S&H were liable. The trial court granted the application
solely as against QHR and S&H; with regard to the other defendants, it
continued the hearing. It set a briefing
schedule for defendants to submit additional evidence and for Altisource to
reply.
The
other defendants did file further briefing, but they did not file any additional
evidence (other than one unauthenticated document to which Altisource duly
objected). Altisource, too, filed
further briefing, plus some additional evidence. After a further hearing, the trial court
denied the application with respect to the other defendants.
face="Times New Roman">III
face="Times New Roman">THE SUFFICIENCY OF THE EVIDENCE OF A
BREACH OF CONTRACT
Appellants
contend that Altisource failed to show that the work that QHR submitted
invoices for was not done.
An
attachment must be based on a contract claim.
(Code Civ. Proc., § 483.010, subd. (a).) To obtain a right to attach order, the
plaintiff must establish the “probable validity†of its claim. (Code Civ. Proc., § 484.090, subd.
(a)(2).) “A claim has ‘probable
validity’ where it is more likely than not that the plaintiff will obtain a
judgment against the defendant on that claim.â€
(Code Civ. Proc., § 481.190.)
“A
trial court’s finding [of probable validity] will be upheld if supported by
substantial evidence. [Citations.]†(Series AGI
v. Eves
(2013) 217 Cal.App.4th 156, 162.)
“‘“[W]e must consider the evidence in the light most favorable to the
prevailing party, giving such party the benefit of every reasonable inference,
and resolving all conflicts in support of the judgment. [Citation.]â€
[Citation.]’ [Citation.]†(Chino Commercial Bank,
N.A. v. Peters (2010) 190 Cal.App.4th 1163, 1169-1170 [Fourth Dist.,
Div. Two].)
Here,
both parties failed to introduce evidence that one would have expected them to
introduce — if it existed. For example,
Altisource failed to introduce evidence of whether it ever actually issued work
orders for the work that QHR claimed to have done.
had checked with Stanley Varghese.
to introduce the alleged emails from Varghese (which would have survived a hard
drive crash, because they would have been on Gmail’s servers). It also failed to introduce any time sheets,
invoices, receipts, or other documentary evidence that it had actually done the
work.
Even
looking just at the evidence that is before us, however, there is substantial
evidence that QHR was engaged in a fraudulent scheme. It represented that it had just two owners,
no employees, and no independent contractors, and that it had a contractor’s
license only in face="Times New Roman">California
done in 27 states — sometimes in as many as four far-flung states on a single
day.
In
addition, QHR submitted multiple invoices for work done at the same
property. It broke these invoices down
into amounts no greater than $500, in the knowledge that Altisource normally
did not request backup documentation for invoices for $500 or less. The amounts of the invoices were suspiciously
repetitive.
Finally,
the invoices were for work supposedly done after the properties had already
been sold to third parties. Jalal tried
to explain that this was because he was not able to submit the invoices via
Altisource’s website until October 2011.
Williams’s declaration, however, fairly understood, stated that the
dates when QHR claimed to have done the work —
not merely the dates when QHR submitted the invoices
— were after the properties were sold. The
printouts attached to Williams’s declaration supported this; they showed that
Altisource was aware that QHR was at least claiming to have done the work
between June and September 2011.
The
evidence that it would have been almost impossible for QHR to have done the
work that it claimed to have done, along with all of the other evidence of a
fraudulent scheme, supported a finding that QHR did not actually do any of the
work.
In
their reply brief, appellants argue that the evidence showed, at most, a tort
rather than a breach of contract. They
forfeited this argument, however, by failing to raise it in their opening
brief. (West v.
JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 799.)
Separately
and alternatively, the argument lacks merit.
Attachment is permitted on “a claim . . . for money
. . . based upon a contract, express or implied
. . . .†(Code Civ.
Proc., § 483.010, subd. (a), italics added.) Here, there was a failure of consideration —
Altisource paid for work that was not done.
“‘It is well settled that when a sum of money has been paid pursuant to
the terms of a sales contract and the consideration for the sale has entirely
failed, the law will imply a promise on the part of the vendor to repay the
money; and in such case an attachment will lie.
[Citations.]’ [Citations.] Moreover, attachment will issue on such an
action, to recover money paid under a contract, on failure of consideration
even though there was no rescission by plaintiff [citations] or rescission of
the contract specifically pleaded.
[Citation.]†(
differently from a sales contract in this respect.
We
therefore conclude that the trial court correctly found that Altisource had
shown the probable validity of a contract claim.
face="Times New Roman">IV
face="Times New Roman">SHIFTING THE BURDEN OF PROOF
Appellants
contend that the trial court erroneously shifted the burden of proof to them.
Basically,
they are complaining about two types of comments that the trial court made at
the initial hearing.
First,
the trial court pointed out that defendants had not introduced evidence that
should have been readily available to them.
For example, it stated, “[W]hether there’s a computer crash or not,
there should be somebody [Jalal] can talk to, if somebody did the work
. . . .â€
Second,
the trial court suggested that defendants should submit additional
evidence. For example, it stated: “[M]aybe [defendants] can help me out with a
declaration explaining what this process is and who did what work when.â€
We
consider the second type of comment first.
It must be recalled that, at the initial hearing, the trial court
continued the hearing, and it allowed the parties to submit additional
evidence, solely with respect to the other defendants. Accordingly, appellants could not possibly
have been prejudiced by the suggestion that defendants submit additional
evidence.
The
challenge to the second type of comment also fails because the attachment
statutes explicitly allow the court to request further evidence. Code of Civil Procedure section 484.090,
subdivision (d), as relevant here, provides:
“[U]pon good cause shown, the court may receive and consider at the
hearing additional evidence, oral or documentary, and additional points and
authorities, or it may continue the hearing for the production of the
additional evidence or points and authorities.â€
This is true regardless of whether the moving party has carried its
initial burden.
Also,
appellants fail to mention the fact that their attorney had just said he wanted
to submit additional evidence. He
stated: “One other thing, I just
received copies of the work orders . . . that w[ere] sent to Mr. Jalal. He’s got those work orders, and I would like
— I just got them. So I didn’t have an
opportunity to submit them.â€
the trial court suggesting that he also submit any other evidence that it would
find helpful.
This
leaves only appellants’ challenge to the first type of comment. We agree that Altisource had the burden of
proving that defendants did not actually do the work. If Altisource failed to meet this burden, it
would be error to grant the right to attach order solely because
actually do the work. Here, however, as
we already held in part III, ante,
Altisource carried its burden.
At
that point, the trial court could properly consider defendants’ failure to
introduce expected evidence. Evidence
Code section 412 provides: “If weaker
and less satisfactory evidence is offered when it was within the power of the
party to produce stronger and more satisfactory evidence, the evidence offered
should be viewed with distrust.â€
We
therefore conclude that the trial court did not erroneously shift the burden of
proof.
face="Times New Roman">V
face="Times New Roman">DISPOSITION
The
judgment is affirmed. Altisource is
awarded costs on appeal against QHR and S&H.
NOT
TO BE PUBLISHED IN OFFICIAL REPORTS
face="Times New Roman">RICHLI
face="Times New Roman"> J.
We
concur:
HOLLENHORST face="Times New Roman">
Acting P. J.
McKINSTER face="Times New Roman">
J.
name="_ftn1" title="">face="Times New Roman">[1]
the “[i]nvoice date†was when QHR supposedly did the work. In the trial court, Altisource adopted this
interpretation, and QHR did not dispute it, even though it reflected negatively
on QHR.
name="_ftn2" title="">face="Times New Roman">[2]
contract to which QHR agreed was that QHR would produce backup documentation on
request, so that its failure to produce backup documentation was, in itself, a
breach. However, there is no
Admittedly, Altisource’s complaint did allege that this was a term of
the contract, but the complaint was not verified and thus could not serve as
evidence in support of the attachment application. (Code Civ. Proc., § 482.040.)
