Soriano v. Chew
Filed 9/10/13 Soriano v. Chew CA6
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opinion has not been certified for publication or ordered published for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.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH
APPELLATE DISTRICT
NORLITO SORIANO,
Plaintiff and
Appellant,
v.
RONALD H. CHEW,
Defendant and
Respondent.
H038003
(Santa Clara
County
Super. Ct.
No. CV149534)
At trial
plaintiff Norlito Soriano failed to convince the court that respondent Ronald
Chew was liable on multiple causes of action arising from the promise of
foreclosure relief in a scheme initiated by Chew's co-defendants, World
Marketers, Inc. and its principal, C. Bryan McCord. The co-defendants, having failed to answer
the complaint, were subjected to a default judgment and are not parties to this
appeal.
Plaintiff
seeks review of the judgment in Chew's favor.
He contends that the court's statement of decision was deficient and
that the court's factual findings were unsupported by
Background
World
Marketers, the entity responsible for the promotional materials on which
plaintiff relied, was owned by defendant McCord. McCord's legal counsel was respondent Chew. Chew and McCord held meetings in 2008 to
discuss a new program McCord wanted to set up to help homeowners stay longer in
their homes when facing foreclosure. In
his deposition testimony
McCord described his service as a "stall tactic," a way clients could
buy time to avert foreclosure for "anywhere from 12 to 18 months," by filing lawsuits against their
lenders. McCord developed a set of
marketing materials that included "Frequently Asked Questions" (FAQs)
Chew had been using in his own law practice.
Chew reviewed a "Consulting Services Agreement" prepared by
McCord to use in his program. According
to McCord, Chew also reviewed the FAQs and told him they were legally
"acceptable." Chew, however,
denied this fact and insisted that someone associated with McCord had taken the
FAQs from Chew's website.
Plaintiff
became a client of World Marketers in 2008, after attending several seminars
run by McCord about the "mortgage referendum program." Through these presentations and in subsequent
meetings with McCord, plaintiff was told that the program provided for legal
counsel. Plaintiff also received the
FAQs that McCord had adapted from the ones that had been on Chew's website. The FAQs described a process that included
the following: "If you are not in
foreclosure, you are given a letter to send to your
lender. . . . [¶] If the lender does not agree to settle the
loan after 20 days, then you send them a Notice of Default and give them an
opportunity to cure their default. After
the Default letter, if they still don't respond, we have an attorney send them
a final Demand Letter in an attempt to get them to settle without going to
court. . . . [¶] [I]f no settlement is offered, or you are not
happy with the terms of their offer, then
our attorneys will file a lawsuit against the lender. . . .
Many times THIS will bring the lender to negotiate a settlement. The filing of the lawsuit concludes Phase One
of the TILA process. [¶] If
continuing court action is necessary, our
attorneys will carry this into court.
At that point you have entered into Phase Two." (Italics added.)
In December
2008 plaintiff signed the Consulting Services Agreement and paid World
Marketers $2,500 based on his understanding that an attorney would be provided
to assist him in any court action.
name="_ftnref2" title="">[2] With the same understanding he gave World
Marketers another $2,500 in early January 2009.
The next month he gave the company another check for $12,500, which was
described as a "cash infusion," based on McCord's explanation that it
was an investment in the "mortgage referendum program." Plaintiff then received a copy of a complaint
filed in pro per in federal district court.
He asked why his own address, not his lawyer's, was on the complaint. McCord did not respond to this inquiry.
The
following month plaintiff received a letter from Chew thanking him for
retaining Chew's law office to represent him and advising him on the next
steps. When plaintiff, happy to have
obtained counsel, showed a copy of the letter to McCord, the latter said
nothing but left with the letter. On March 30, 2009, Chew wrote plaintiff
another letter informing him that the previous letter had been sent to him by
mistake; in fact Chew did not represent plaintiff.
Because
plaintiff did not know how to handle his federal action by himself, he had to
dismiss it. He lost his property to
foreclosure in March 2010.
Plaintiff
filed this action on August 11, 2009,
against World Marketers, McCord, and Chew.
Of the 15 causes of action in the complaint, 14 were against Chew:
unlawful business practice, in violation of Business and Professions Code
section 17200; misrepresenting legal services, in violation of the
Consumers Legal Remedies Act (Civ. Code, § 1770); financial abuse of an
elder, in violation of the Elder Abuse and Dependent Adult Civil Protection Act
(Welf. & Inst. Code, §§ 15610.30, 15657.5); criminal elder abuse, in
violation of Penal Code section 368; violation of the federal Racketeer
Influence and Corrupt Organization Act (18 U.S.C §§ 1961 et seq.) (RICO);
aiding and abetting each other defendant's wrongful conduct; breach of
fiduciary duty; bad faith; money had and received; refusal to provide promised "loan
assistance services" in violation of a joint venture obligation;
conversion; intentional infliction of emotional distress; and negligence.
The action
was tried by the court on March 1-3 and July
26, 2011. After both parties
rested, Chew made an oral motion for a directed verdict. The court, skeptical of the coincidental
nature of the same material being on Chew's website and in McCord's FAQs,
determined that McCord's testimony was necessary on the issue of whether there
was a joint venture between the defendants.
Consequently, the court reserved its ruling on Chew's motion for a
directed verdict and granted a continuance, but it acquiesced in Chew's request
that McCord's testimony be obtained through a deposition. After receiving that testimony and hearing
argument on the motion, the court denied the motion.
On November
15, 2011, default judgments for $281,875.00 were entered against McCord and
against World Marketers. On the same
day, the court issued its tentative decision finding no liability of Chew. Plaintiff objected and proposed alternative
findings on all causes of action; but on January 4, 2012, the court filed its
judgment and final statement of decision in Chew's favor. This appeal followed.
Discussion
Although it
is difficult to comprehend plaintiff's legal analysis, he appears to contend
that (1) the court's statement of decision did not address all causes of action
against Chew and explain its findings on all material issues; and (2) a de novo
review of the "undisputed facts" supports a finding in his favor on
the causes of action for agency, conspiracy, and aiding and abetting. Guided by the proper standards of review, we
find no basis for reversal in plaintiff's arguments.
1. Statement of Decision
The court
issued a tentative decision which invited the parties to submit objections
pursuant to California Rules of Court, rule 3.1590(g). Chew's disingenuous assertion
notwithstanding,
title="">[4]
plaintiff did submit a response in which he objected as follows: "1) Lack of rulings on each of the
causes of action; [¶] 2) Factual findings inconsistent with the trial
transcript or exhibits; [¶] 3) Lack of findings on causation and damages,
including punitive damages; [¶] 4) A finding that reliance is required, when
under Bus. & Pro. Code § 17200, reliance is not required; [¶] 5) the
Court's finding on agency, conspiracy, joint venture, partnership and aiding
and abetting. . . . The overwhelming evidence shows that such
relationships existed." Without
identifying the applicable cause of action, plaintiff objected again that
reliance was not required, "since Plaintiff testified on direct
examination to the contrary." He
also asked for rulings on the following issues:
the factual grounds for the alleged Business and Professions Code
section 17200 violation; whether Chew had engaged in an illegal enterprise in
violation of RICO; whether Chew owed plaintiff a duty of care; whether Chew had
rebutted the presumptions that he intended the consequences of his voluntary
and unlawful acts; whether Chew had a written attorney-client fee agreement
with McCord and World Marketers; and whether Chew lacked credibility in light
of his admissions of "false and/or misleading discovery responses, and a
false and misleading website disclosure."
The trial
court acknowledged plaintiff's objections in its final statement of
decision. It explained, however, that
all of the causes of action against Chew were rooted in the theories of agency,
conspiracy, and aiding and abetting.
Accordingly, rather than discuss every element of all 14 of the causes
of action asserted against Chew, the court addressed the predicate relationship
between Chew and the other defendants.
We see no error in the court's exercise of judicial economy by resolving
the underlying issues on which all the allegations against Chew depended.
As
plaintiff alone notes (Chew having unwisely relied on the defenses of waiver
and implied findings), a trial court's statement of decision must explain
"the factual and legal basis for its decision as to each of the principal
controverted issues at trial." (Code Civ. Proc., § 632.) The statement of decision will be deemed
adequate "if it fairly discloses the determinations as to the ultimate
facts and material issues in the case." (Central Valley General Hosp. v. Smith (2008) 162 Cal.App.4th 501,
513; Golden Eagle Ins. Co. v. Foremost
Ins. Co. (1993) 20 Cal.App.4th 1372, 1379-1380.)
Our review
is limited. "Where a statement of
decision sets forth the factual and legal basis for the decision, any conflict
in the evidence or reasonable inferences to be drawn from the facts will be
resolved in support of the determination of the trial court decision." (
Cal.App.3d 351, 358; Estate of Young
(2008) 160 Cal.App.4th 62, 75–76.)
However, if the statement of decision "does not resolve a
controverted issue, or if the statement is ambiguous and the record shows that
the omission or ambiguity was brought to the attention of the trial court . . .
it shall not be inferred on appeal . . . that the trial court
decided in favor of the prevailing party as to those facts or on that
issue." (Code Civ. Proc.,
§ 634.)
Plaintiff
does not dispute the trial court's statement that his causes of action were all
based on agency, conspiracy, or aiding and abetting. Nor does he take issue with the adequacy of
the court's explanation of its reasoning with regard to those theories. At most plaintiff asserts, without a developed
argument, that the court's findings on agency, conspiracy, and aiding and
abetting are unsupported by substantial evidence. His focus is primarily on the elements of the
underlying causes of action, not the court's explanation of the factual and
legal basis of its decision. If,
however, the court's findings on each theory are supported by substantial
evidence, then the conduct alleged in the complaint cannot be attributed to
Chew even if his co-defendants, World Marketers and McCord, committed all of
those unlawful acts. We therefore examine
the viability of each theory, reviewing the record in light of the proper
standards of review.
2. Sufficiency of the Evidence
At trial
plaintiff testified that in the approximately two dozen meetings he had with
McCord or presentations he attended in 2008, McCord represented that he had a
lawyer who was going to litigate to get plaintiff's house back. McCord did not, however, give the lawyer's
name.
Chew,
representing himself, testified that the extent of his involvement with World
Marketers was in drafting complaints for McCord, for which he received $800 per
complaint.
the clients of World Marketers. He was
not McCord's partner, and he did not engage in any fee-splitting arrangement
with McCord.
title="">[6] He was not hired to represent any of World
Marketers' clients, and he was not asked to draft its marketing materials. The FAQs World Marketers had distributed to
prospective clients were, Chew suspected, "cut and pasted" from his
website, which advertised Chew's own loan litigation services. Chew thought it might have been McCord's
girlfriend who took the information from his website.
Plaintiff
questioned Chew extensively about misstatements in Chew's website FAQs, but the
court appropriately commented that it saw no "nexus between the information
that is put on [Chew's] website and any element of reliance by
[plaintiff]," particularly since there was no evidence that plaintiff ever
saw the marketing statements made to the public by Chew on his website. Plaintiff's counsel acknowledged that the
questioning about misstatements was aimed only at impeaching Chew's
testimony. Counsel called it
"professional suicide" to make those "false and misleading"
statements to the public.
It was
World Marketers' marketing materials, not Chew's, that contained the
would be represented by an attorney in court as part of the foreclosure delay
or mortgage referendum program. Although
plaintiff sought to show that Chew was involved in creating those materials for World Marketers, the court excluded
hearsay testimony offered by plaintiff's counsel to show that fact. Chew adamantly denied that he gave the FAQs
from his website to World Marketers to enable the company to provide them to
its clients. The court actually found
Chew's testimony "at times purposefully sketchy and/or evasive," as
was that of McCord. It acknowledged that
plaintiff was "undoubtedly disadvantaged by Defendants McCord and Chew's
less-than-forthcoming answers to questions in key areas." Nevertheless, it
found that it "[could not] substitute its skepticism about witness
credibility for persuasive countervailing evidence on the issue of
liability."
Plaintiff
accepted the trial court's suggestion that the asserted liability of Chew for
fraud was based on agency. Responding to
the court's inquiry, he explained, "The agency relationship is that they
met together; they have had these meetings; they've talked about the formation
of World Marketers; and that Mr. Chew is to prepare the [consulting] contract. . . . And additionally that Mr. Chew prepared [the
FAQs] . . . ."
Plaintiff argued that after Chew created "the false and misleading"
information, McCord, as Chew's agent, provided it to the consumers. Chew then benefited from his
misrepresentation by receiving money from the clients who relied on the promise
of an attorney. Plaintiff asked the
court to discredit Chew's testimony that the FAQs were derived from his
website, because Chew had not retained any record of that material, which he
had since removed. Indeed, plaintiff
characterized Chew's representation as not credible, because "this
information [in the FAQs] is so wild—really false statements—that it is not
credible that he put it on the web. . . .
And . . . not only does it make no sense for Mr. Chew to put it
on his website, it makes perfect sense for the document to have been created
for World Marketers."
Plaintiff
agreed with the court that the second, third, fourth, and fifth causes of
action were all, like the fraud cause of action, based on an agency
relationship between Chew and World Marketers.
joint venture alleged in the 12th cause of action. The sixth cause of action (racketeering),
according to plaintiff, was shown by "one fraudulent scheme with multiple
predicate acts." The seventh cause
of action for aiding and abetting consisted in "an allegation that each
Defendant aided and abetted in the wrongful conduct that is alleged in other
causes of action." As to the ninth
cause of action for breach of Chew's fiduciary duty to provide legal services,
plaintiff argued that Chew had created a fiduciary duty by creating the
marketing document, by oral representations (presumably those of McCord), and
by sending the March 11, 2009 retention letter.
The same three grounds were asserted to support the 15th cause of action
for negligence. Similarly, the 10th
cause of action for bad faith was based on a "special relationship"
created through Chew's written promises and "the oral representations that
his agent made." The 11th cause of
action for money had and received, the 14th cause of action for intentional
infliction of emotional distress, and the 15th cause of action for negligence
were likewise predicated on the written and oral representations.
"The
existence of agency is a question of fact for the trial court." (Burr
v. Capital Reserve Corp. (1969) 71 Cal.2d 983, 995.) Plaintiff argued that McCord and Chew
"intended to act on each other's behalf." According to plaintiff, Chew approved of
McCord's conduct both before and after McCord made misrepresentations to the
public and "accepted the benefits of the illegal enterprise." Even if not an actual agent, plaintiff
argued, McCord was Chew's ostensible agent, because Chew "intentionally or
carelessly created the impression that . . . his [legal]
services were going to be provided."
The trial
court, however, found no evidence that McCord was Chew's agent, whether
actually, ostensibly, or by ratification.
"by all indications 'the principal' in the operation of the foreclosure
delay program and the mortgage investment referendum sponsored by World
Marketers." Both programs were
"established, marketed, and operated" by McCord, who contracted
directly with program participants and made no statements purporting to
represent Chew "in any program-related capacity." Chew "did not generally have any direct
contact with program participants."
He "prepared only a small number of civil 'pro per' complaints for
program participants and did so only at Defendant McCord's
direction." He was not engaged in a
fee-splitting arrangement with McCord, but instead was paid "only a flat
fee for each civil complaint with no percentage of business profits."
Addressing
ostensible agency, the court further explained that "[t]here were no
actions [that] would have reasonably given Plaintiff the impression that
Defendant McCord was Defendant Chew's agent.
Plaintiff admitted that he had no contact with Defendant Chew prior to
signing the contract with Defendant McCord/World Marketers. Therefore, Plaintiff did not rely on
Defendant Chew's representations or conduct in deciding whether to sign up for
the foreclosure delay program or the mortgage investment referendum. Likewise, the evidence at trial did not
establish 'agency by ratification.' A
principal cannot ratify the act of the alleged agent, unless the 'agent'
purported to act on behalf of the principal. . . . Here, there
was no evidence that Defendant McCord held himself out as Defendant Chew's
agent."
On appeal,
plaintiff argues that "[i]t is undisputed [that] Chew knew McCord was
promising fraudulent and illegal in-court attorney representation" and
"[i]t is undisputed [that] Chew received benefits form [
solicitation." As to ostensible
agency, plaintiff contends only that Chew "intentionally or carelessly
created the impression that McCord/World was Chew's agent, and that [plaintiff]
reasonably believed Chew was McCord/World Marketers' agent. It is undisputed [that] Chew knew McCord was
promising in-court legal representation, and that his Law Firm was the promised
representation. Appellant reasonably
believed such legal services would be provided, and Chew the one to provide
them." And on the subject of
ratification, plaintiff again argues, "It is undisputed [that] Chew
learned of McCord/World's conduct after it occurred, and approved, of
it. . . . It is undisputed [that] Chew knew McCord was promising
fraudulent and illegal in-court attorney representation. . . .
It is undisputed [that] Chew received legal work from the solicitation, there
was a fee splitting arrangement, and Chew accepted and kept the consumers'
monies, even after learning [that] the promised in-court representation was not
going to be provided."
To accept
these arguments, however, would require us to completely disregard the
time-honored principle that when findings of fact are challenged on a civil
appeal, "the power of an appellate court begins and ends with a
determination as to whether there is any substantial evidence, contradicted or
uncontradicted," to support the findings below. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429.) We must therefore "view the evidence in
the light most favorable to the prevailing party, giving it the benefit of
every reasonable inference and resolving all conflicts in its favor in
accordance with the standard of review so long adhered to by this court. (Ibid.)" (Jessup
Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) Moreover, findings of fact are liberally
construed to support the judgment. (
Cal.App.4th at p. 76.)
In his
appellate brief plaintiff offers a skewed depiction of the predicate facts,
calling them "undisputed." Not
only was his view disputed, however, but it was expressly rejected in key
respects by the court as trier of fact.
Plaintiff "seems to want this court to reevaluate [Chew's]
credibility and reweigh the evidence presented below, but we can do
neither. [Citations.]" (Foust
v. San Jose Const. Co., Inc. (2011) 198 Cal.App.4th 181, 188; see also
Cal.App.4th at p. 76 ["We may not reweigh the evidence and are bound by
the trial court's credibility determinations"].)
Having
implicitly found Chew's testimony -- which was corroborated in significant
details by McCord -- credible on this issue, the trial court found insufficient
proof that any agency relationship had been established between Chew and
McCord. Plaintiff fails to convince us
that this conclusion was unsupported by substantial evidence.
The trial
court's next finding, that plaintiff failed to prove a conspiracy to defraud
plaintiff through the foreclosure delay program, was based on the lack of
evidence that Chew had "any appreciable involvement in the operation of
the mortgage investment referendum or that he derived any economic benefit from
it." The court also noted that
plaintiff had failed to prove that Chew "intended to join with Defendants
McCord/World Marketers in a scheme to defraud Plaintiff via the foreclosure
delay program. The evidence established
that Defendant Chew merely agreed to draft 'pro per' complaints for defaulting
homeowners at Defendants McCord/World Marketers' behest with the goal of
delaying the foreclosure process. While
Defendant Chew drafted the marketing materials for the foreclosure delay
program, the evidence fell short of convincingly establishing that he knew of
Defendants McCord/World Marketers' plan to mislead homeowners about the
spectrum of legal services provided by the program."
Plaintiff
does not offer any sound basis for overturning these findings. His entire argument on this theory is that
"[i]t is undisputed [that] Chew and McCord hatched a program to solicit
monies based on promised legal representation in-court [sic], and then failed to provide it. It is undisputed [that] they agreed [to]
funnel legal business through a nonlawyer entity. A conspiracy can be inferred from the
circumstances. There is no substantial
evidence that a conspiracy was not created, and the undisputed facts support a
De Novo review finding of conspiracy."
Plaintiff's
argument is flawed for multiple reasons.
A de novo review would clearly be improper. Whether a conspiracy can be inferred is immaterial, since the trial court's own
reasonable inference to the contrary is entitled to deference. Finally, the facts on which the conspiracy
theory is premised were anything but "undisputed"; on the contrary,
the allegation that Chew and McCord together "hatched" this scheme
was vigorously disputed by Chew at trial; nor did Chew ever accept plaintiff's
portrayal of him as a participant in a plan to "funnel" his legal
business through World Marketers.
Plaintiff's
position on aiding and abetting also cannot survive scrutiny. The seventh cause of action in his complaint
did not identify a specific wrong
that Chew aided and abetted but referred generally to all of the "wrongful
conduct" described in the previous six causes of action. Thus, aiding and abetting was a
statutory violations alleged against all three defendants.
Liability
for aiding and abetting an intentional
tort may be imposed on a defendant who "(a) knows the other's conduct
constitutes a breach of duty and gives substantial assistance or encouragement
to the other to so act or (b) gives substantial assistance to the other in
accomplishing a tortious result and the person's own conduct, separately
considered, constitutes a breach of duty to the third person." (Saunders
v. Superior Court (1994) 27 Cal.App.4th 832, 846.) On appeal, plaintiff again points to
"undisputed" facts that either were not relevant to Chew's liability
or actually were disputed and eventually found not to be true. For example, whether Chew knew that the
marketing materials and contract were going to be used to solicit clients for
the foreclosure delay program does not compel an inference either (1) that he
knew McCord intended to defraud plaintiff, commit elder abuse, or violate other
statutes protecting consumers like plaintiff; or (2) that he assisted or
encouraged McCord to do so.
Likewise,
plaintiff misstates the record by contending that it was "undisputed"
that Chew created the marketing materials for the foreclosure delay program.
This factual assertion was steadfastly disputed by Chew; and although Chew's
testimony was found questionable by the trial court, its skepticism did not
vitiate its finding that Chew did not give "substantial assistance or
encouragement to Defendants McCord/World Marketers to wrongfully take
Plaintiff's monies. As discussed above,
Defendant Chew's involvement with the foreclosure delay program was limited to
developing marketing materials and drafting several 'pro per' complaints for
program participants. Defendant Chew had
little or no involvement with the mortgage investment referendum and did not
take an active role in the ongoing operations of the foreclosure delay
program. Moreover, the evidence at trial
did not support a contention that Plaintiff relied upon the marketing materials
prepared by Defendant Chew in making the decision to participate in the
foreclosure delay program and/or the mortgage investment referendum. Rather, Plaintiff testified that he relied
upon the oral representations made by Defendant McCord during the course of
multiple program seminars which he attended.
There was no evidence to suggest that Defendant Chew took an active part
in or even attended the seminars that induced Plaintiff to sign up for the
foreclosure delay program and the mortgage investment referendum."
None of
plaintiff's slanted, unsupported assertions that facts were
"undisputed" assists him in confuting the trial court's clear statement
of its conclusions on plaintiff's aiding and abetting theory. Having been offered no sound basis on which
to overturn the court's resolution of this issue, we must uphold it as
supported by substantial evidence presented at trial.
It would be
easy to defer to any factual finding that McCord and World Marketers deceived
and misled clients like plaintiff in the promises they made in their program
materials. McCord's own deposition
testimony, often supercilious in tone yet equivocating, would alone have
supported such a conclusion. But the
misconduct of Chew's co-defendants is not at issue in this appeal. The trial court found that the conduct of
McCord and World Marketers was not attributable to Chew. Plaintiff failed to meet his burden of proof
below, and he has not met his burden on appeal to show error. Because the trial court's findings are
supported by substantial evidence, whether this court would have reached the
same conclusion is immaterial.
Disposition
The
judgment is affirmed.
____________________________
ELIA,
J.
WE CONCUR:
_____________________________
RUSHING, P. J.
_____________________________
PREMO, J.
name="_ftn1" title="">[1]
Attempts to subpoena McCord for trial were unsuccessful. During trial the court allowed counsel to
obtain his testimony by deposition.
name="_ftn2" title="">[2]
Chew takes pains to emphasize that the Consulting Services Agreement itself did
not state that plaintiff would be represented by an attorney. It has not escaped our notice, however, that
the agreement did not identify any
specific services; it promised only that World Marketers would "provide
the real estate consulting service pursuant to this Agreement." The only obligations described in the
document were those of plaintiff.
