Case Name: JP Morgan Chase Bank, N.A. v. Goldson, et al.
Case No.: 16CV294987
Plaintiff/cross-defendant JP Morgan Chase Bank, N.A. (“Chase”) moves for summary judgment, or in the alternative, summary adjudication, in its favor and against defendants Dashon Goldson (“Goldson”) and Amadouba Tall (“Tall”) on the claims set forth in its First Amended Complaint (“FAC”) and the First Amended Cross-Complaint (“FACC”) filed by Goldson.
After full consideration of the evidence, separate statements and authorities submitted by the parties, the Court makes the following rulings:
Chase’s request for judicial notice is GRANTED. (Evid. Code, § 452, subd. (d).)
Chase’s motion for summary judgment is DENIED. Chase’s alternative motion for summary adjudication is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to Chase’s second and third causes of action in its FAC and as to the first, second, third, fourth, fifth and sixth causes of action in Goldson’s FACC. The motion is otherwise DENIED.
With its first cause of action, Chase asserts a claim for fraudulent conveyance under the Uniform Fraudulent Transfer Act (“UFTA”; Civ. Code, § 3439 et seq.) based on its allegations that Tall knowingly transferred funds that were not allowed to be transferred due to a writ of attachment to Goldson. In order to meet its initial burden on the first cause of action, Chase must present admissible evidence which establishes that (1) Tall made a transfer of funds he was not entitled to, (2) Chase is a creditor of Tall and entitled to the funds he transferred, and (3) Tall made the transfer with actual intent to “hinder, delay or defraud” Chase. (Civ. Code, § 3439.04.) The Court finds that Chase has done so here, and its contention that it submitted establishes the requisite fraudulent intent on the part of Tall is well taken. (See Chase’s Separate Statement of Undisputed Material Facts (“UMF”) Nos. 5-7, 13-29, 31, 38; Torres Decl., ¶¶ 6-7, Exhibits E and F.)
Per this evidence, Tall was aware that his motion to set aside the writ of attachment that resulted in a hold on his and Invictus’s Chase accounts had been denied by the Court. As such, he must have known that any movement or use of those funds by him was improper. This fact, along with Chase’s other evidence which demonstrates Tall’s claimed insolvency, the nature of Tall’s relationship with the individual to whom the funds were transferred, Goldson, and the fact that all of his funds were transferred by him while he faced a potential judgment against him in the Davis Action, support the inference that Tall transferred the funds from his Chase account so as to prevent Chase (and Davis) from collecting on it. Chase’s evidence additionally establishes that it was entitled to $600,000 of the funds transferred by Tall as an assignee of the judgment obtained in the Davis Action and thus damaged by Tall’s removal of those funds from his account.
The burden therefore shifts to Tall and Invictus (collectively, “Defendants”) to raise a triable issue of material fact. In this regard, Defendants assert that there is a genuine issue of fact regarding whether Tall had the requisite fraudulent intent necessary to establish this claim. Defendants maintain that Tall did not, a contention that primarily rests on the contents of the declaration by Tall submitted in support of Defendants’ opposition.
The Court finds that Tall’s declaration clearly establishes a triable issue regarding his intentions with the transfer of funds from his account to Goldson. If Tall honestly believed that the hold had been validly lifted and that he was free to do with his money what he wished as he alleges he had been instructed by his financial advisors, then he did not possess the actual intend to defraud Chase or Davis. Such intent would require knowledge on his part of him doing something he knew he was not permitted to do, i.e., move funds held pursuant to a writ of attachment that were earmarked for Chase and Davis. Moreover, Tall’s declaration establishes that he owed money to Goldson and transferred funds to him in order to satisfy the debt owed, not necessarily to make it difficult for Chase to collect on amounts owed to it.
In the second cause of action for money had and received, Chase alleges that Goldson received money that was intended to be used for payment to Davis and that was the subject of the writ of attachment against Tall in the Davis Action. (FAC, ¶ 24.) The money was not used for payment to Davis, but instead to Goldson, who has not given the money back to Davis or Chase. (Id., ¶¶ 25-26.)
“A cause of action is stated for money had and received if the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff. This common count is available in a variety of situations and lies wherever one person has received money which belongs to another, and which in equity and good conscience should be paid over to the latter.” (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 934 [internal citations and quotations omitted].) Such a claim can be based on money paid by mistake or fraud. (See Utility Audit Co., Inc. v. City of Los Angeles (2003) 112 Cal.App.4th 950, 958; City Bank of San Diego v. Ramage (1968) 266 Cal.App.2d 570, 585.) In order to succeed on such a cause of action, a plaintiff must prove that: (1) the defendant received money that was “intended to be used for the benefit of [the plaintiff]”; (2) the money was not used for the plaintiff’s benefit; and (3) the defendant has not given the money to plaintiff. (Avidor v. Sutter’s Place, Inc. (2013) 212 Cal.App.4th 1439, 1454.)
Chase asserts that it is entitled to summary adjudication of this cause of action because (1) Goldson was the recipient of funds that were improperly transferred to him as they were intended to be held for Davis/Chase’s benefit (i.e., satisfy the judgment in the Davis Action), (2) the money was not used for Davis or Chase’s benefit as Chase was required to repatriate the funds on its own, and (3) neither Goldson nor Tall have paid any money back to Chase to replace the funds improperly transferred.
While there is a triable issue of material fact regarding whether Tall transferred the funds in his personal account that were the subject of the writ of attachment with fraudulent intent, intent is not an element of a claim for money had and received. Chase’s evidence otherwise establishes that the funds transferred to Goldson by Tall were subject to a writ of attachment and thus intended to be held for Davis/Chase’s benefit. An attachment is a provisional remedy that enables a creditor to preserve the value of a potential judgment while a collection action is pending by preventing a debtor from transferring or encumbering the assets available to satisfy the judgment. (See Kemp Bros. Const., Inc. v. Titan Elec. Corp. (2007) 146 Cal.App.4th 1474, 1476.) Its very purpose is to benefit the creditor. The money was not used to benefit Davis or Chase because it went to Goldson, and none of the money has been paid back to Chase. Chase has consequently met its initial burden on the second cause of action.
In opposition, Defendants (who are not subjects of this claim) insist that Chase has not satisfied the element that the $600,000 that was transferred was intended to be used for its benefit. They explain that Goldson was not unjustly enriched by the payment because Tall owed him substantially more at the time and Tall did not make the payment by mistake. But given Defendants’ assertion that Tall only accessed and transferred the funds in his personal account at Chase because he was informed by his financial advisors that the hold had been lifted and he was free to do with his money as he wished, and given the fact that Defendants do not dispute Chase’s assertion that the hold was wrongfully lifted and should have remained in place, mistake is precisely what Defendants evidence suggests with regard to Tall’s conduct. The transfer should not have happened in the first place because the hold should have remained on the account. But for Chase’s mistake, there would have been no transfer of the funds in Tall’s personal account to Goldson. A wrongful motive is not necessary to establish this claim, as it is with the fraudulent conveyance cause of action. Defendants’ contention, therefore, that Chase has not established all of the elements of this claim is not well taken, and they otherwise fail to establish a triable issue of material fact.
Chase’s third cause of action, which is asserted against all defendants, seeks a judicial determination that Chase is the rightful owner of the funds that were the subject of the writ of attachment transferred from Tall and Invictus to Goldson.
In order to qualify for declaratory relief, a party must demonstrate: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party’s] rights or obligations[.]” (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582.) A declaration of rights or duties with respect to property may be a proper subject of declaratory relief. (Id.) An actual controversy “encompasses a probable future controversy relating to the legal rights and duties of the parties.” (Id.)
Chase’s evidence establishes that the funds transferred to Goldson were intended to be held for its benefit pursuant to the writ of attachment, but transferred by Tall after the hold was inadvertently lifted. In their opposition, Defendants acknowledge that there is a controversy regarding whether the $600,000 belongs to Chase or Goldson but assert that it cannot be summarily adjudicated at this juncture because the claim is really based on the alleged fraudulent conveyance, which involves triable issues.
However, it is clear that the money that made its way to Goldson was intended to be for Davis/Chase. Said money should never have been paid to Goldson in the first instance, and only was due to either Tall’s fraudulent intent in concert with Chase’s mistake or solely to Chase’s mistake. Thus, contrary to Defendants’ assertions, the Court should find that there is no triable issue with regards to who is the rightful owner of the funds transferred by Defendants to Goldson. This Court is not aware of any authority that would entitle Goldson to the funds even if there was no fraudulent intent involved on Tall’s part and the transfer was solely the result of Chase’s mistaken lifting of the hold. The fact remains- those funds were to be held subject to a writ of attachment and ultimately used to pay the judgment issued in the Davis Action. Despite Chase’s mistake, those funds still had that purpose. Accordingly, summary adjudication of this claim in Chase’s favor is warranted.
With its remaining claim, Chase requests that the Court impose a constructive trust over the $600,000 held in Goldson’s account.
A constructive trust is an equitable remedy to prevent unjust enrichment, not a cause of action in and of itself. (See La Paglia v. Sup. Ct. (1989) 215 Cal.App.3d 1322, 1325; see also Haskel Engineering & Supply Co. v. Hartford Acc. & Indemnity Co. (1978) 78 Cal.App.3d 371, 378.) In general, the proper procedural vehicle for challenging the propriety of a remedy at the pleading stage is a motion to strike, not a demurrer. (See Caliber Bodyworks, Inc. v. Sup. Ct. (2005) 134 Cal.App.4th 365, 384 [a demurrer is not the appropriate vehicle to challenge a portion of a cause of action demanding an improper remedy].) However, it is common for plaintiffs to plead the remedy of a constructive trust as a “cause of action” and for courts to treat the claim accordingly. (See Dabney v. Philleo (1951) 38 Cal.2d 60, 67; Fergus v. Songer (2007) 150 Cal.App.4th 552, 569.) A cause of action seeking to impose a constructive trust will generally be allowed so long as it is predicated upon an underlying claim of fraud, breach of fiduciary duty, or other wrongful act entitling the plaintiff to some relief. (See Ehret v. Ichioka (1967) 247 Cal.App.2d 637, 642 [emphasis added]; see also Olson v. Toy (1996) 46 Cal.App.4th 818, 823.)
Chase contends that it is entitled to the imposition of a constructive trust because Tall wrongfully transferred funds to Goldson, who knew that they were unlawfully transferred. However, as explained above, there is a triable issue of material fact regarding Tall’s intentions with the transfer. Consequently, it is not clear that an underlying wrongful act exists which entitles Chase to a constructive trust and therefore summary adjudication is not proper.