Motion-Secondary: COMMONWEALTH LAND TITLE INSURANCE COMPANY VS. FEDEX OFFICE AND PRINT SERVICES, INC et al (PROVIDE ACCESS)

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Law Offices of
CRAIG J. BASSETT
25 W, First Strect
Morgan Hill, CA
95037-4559
(408) 779.0007

Craig J. Bassett (SB# 106825)
Attorney at Law

25 W. First Street

Morgan Hill, CA 95037-4559
TEL (408) 779-0007

FAX (408) 778-6005

EMAIL cbassett@garlic.com

Attorney for Defendant
ELVIA PALOMINO

ELECTRONICALLY
FILED

Superior Court of Catifornia,
County of San Francisco

05/18/2017
Clerk of the Court
BY: SANDRA SCHIRO
Deputy Clerk

SUPERIOR COURT OF CALIFORNIA, COUNTY OF SAN FRANCISCO
Civil Division, 400 McAllister Street, San Francisco, California 94102-4514
(Unlimited Jurisdiction Civil Case)

COMMONWEALTH LAND TITLE
INSURANCE COMPANY;

Plaintiff,
vs.

FEDEX OFFICE AND PRINT
SERVICES, INC.; WINSTON LUM;
KAUSHAL NIROULA; JAY
CHANDRAKANT SHAH; ELVIA
PALOMINO; MORAD AFRAIMI,
MELVIN LEE EMERICH; MARTINI &
CHNOOGLE; GRACHELLE
LANGUBAN; and MERCHANT’S
BONDING COMPANY;

Defendants.

AND RELATED CONSOLIDATED
ACTION of Hwang v. FedEx Office and
Print Services, Inc. (CGC-11-512102)

Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings

Lead Case No. CGC-10-503332
(Consolidated with CGC-11-512102)

OPPOSITION OF DEFENDANT ELVIA
PALOMINO TO MOTION BY PLAINTIFF
COMMONWEALTH LAND TITLE
INSURANCE COMPANY FOR
JUDGMENT ON THE PLEADINGS

Hearing:

Reservation No.: 04260531-10

Date: May 31, 2017

Day: Wednesday

Time: 9:30 a.m.

Dept: 302

Judge: Hon. Harold E. Kahn
Clerk Dept. 302: (415) 551-3723

Place: Superior Court, San Francisco County
Civil Division, 400 McAllister Street
San Francisco, CA 94102-4514

Complaint Filed: September 8, 2010

MSC: Monday, June 5, 2017 1:00 p.m. D. 210

Trial: Monday, June 12, 2017 9:30 a.m. D. 206

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Law Offices of 26
CRAIG J. BASSETT
25 W, First Strect
Morgan Hill, CA

95037-4559

(408) 779.0007

Defendant ELVIA PALOMINO (Palomino) opposes the motion of plaintiff
COMMONWEALTH LAND TITLE INSURANCE COMPANY (CommonWealth) for judgment
on the pleadings on the grounds that (1) the motion is untimely, (2) neither res judicata nor collateral
estoppel apply to Palomino, (3) the “judgment” sought by CommonWealth far exceeds the damages
alleged and prayed for in the operative pleading, and (4) CommonWealth has failed to meet its
burden to show that judgment on the pleadings and all conditions to obtain it have been met and can
be granted by the court, including a failure of proof of each and every element underlying the two
causes of action of the operative pleading against defendant Palomino (conversion and unjust
enrichment) and concurrent negation of each and every applicable affirmative defense alleged by
Palomino in her answer. CommonWealth’s motion is so lacking in merit that it would appear it has
brought the motion with an ulterior motive to flush out evidence of Palomino’s basic defense just

before trial. This is all the more reason why the motion must be DENIED.

L Background.
Jay Shah (Shah) is physically disabled with cerebral palsy since before birth. In 1998 he

married Elvia Palomino (Palomino) who had two children from a previous marriage. Together they
had two more children. Before 1998, Shah owned several parcels of rural ranch property in the hills
east of San Jose on Quimby Road. He kept these as his sole and separate property when he married
Palomino. This was also his primary residence. Together they owned a home in the Naglee Park
area of San Jose on 15" Street in San Jose which they purchased in 2007. Not wanting to live ona
ranch, this became Palomino’s preferred primary residence in the city. When she married Shah,
Palomino owned her own home in Texas. Her parents also owned their own home in that state.
Both sold their homes and with the net proceeds of sale eventually purchased replacement homes
in Los Bajfios, California. Palomino’s two children from the previous marriage, as teenagers and
young adults, lived with their maternal grandparents in Los Bajfios.

In March 2010, Shah was arrested for alleged white collar crime after being caught up in a

scheme masterminded by a murderer and thief Kaushal Niroula (Niroula). The scheme involved a

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Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings May 17, 20171 || patsy tennis instructor named Winston Lum (Lum), and a dishonest notary public named Grachelle

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Languban (Languban) who worked for FedEx Office and Print Services, Inc. (FedEx).

Shah hired an attorney named Melvin Lee Emerich (Emerich) to represented him in business

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4 || dealings. At the instruction of his client, Emerich set up a Nevada corporation on Feb 04 2009 with
5 || agarish name of “Martini & Chnoogle, Inc.” (Martini & Chnoogle). This ended up being essentially
6 || ashell holding company, not engaged in business. Although Emerich occupied the outward roles
7 || associated with this corporation, including filing articles, acting as an officer, and taking charge of
8 || the money as a signatory on bank accounts, the corporation and its assets belonged to Shah.

9 Shirley Hwang (Hwang), a licensed real estate broker since 1983 in California, in her
10 || capacity as trustee of various express trusts, owned three brand-new high-rise condominiums near
11 |] the top floor (about 54 stories) at One Rincon Hill in San Francisco (425 1* Street, Units 4802, 4902,
12 || and 5501, San Francisco, California 94105) each worth over a million dollars ($1M-+) at purchase.
13 || These were owned free and clear of any mortgage. Either Hwang was independently wealthy, or else
14 || the beneficiaries of the trusts (possibly other persons) were wealthy investors hoping to make money
15 || flipping these units. Hwang did not occupy any of the units as her residence, but staged some of
16 || them with furniture and decor for resale purposes. None was rented out to tenants.

7 Niroula’s clever scheme involved the following basic elements: Niroula had three (3) grant
1g || deeds prepared by an escrow officer Nga Tran (Tran) ofa private escrow company in San Jose. Each

19 || deed dealt with one of the One Rincon Hill units owned by Hwang and showed Hwang (as trustee)
20 || as grantor and Lum as grantee.' Outside of Tran’s purview, whose involvement at that point was
21 || limited to simply preparing these deeds as an accommodation to Niroula, someone forged Hwang’s
22 || signature on these deeds and then convinced Languban, then working in San Francisco for FedEx

23 || and whose commission was obtained in Los Angeles County, to notarize these phony deeds to make

iq a. “Tf an express trust relating to real property is not contained or declared in the grant to the
2 || trustee, or in an instrument signed by the trustee and recorded in the same office with the grant to
3 || the trustee, the grant shall be deemed absolute in favor of a person dealing with the trustee in good
4 || faith and for a valuable consideration.” [Prob. Code, § 18103.]

Law Offices of

Crate J Basser

25 W. Firs Strect

Morgan Hill, CA _3-
95037-4559

(403) 779-0007 Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings May 17, 20171 || them appear legitimate. Then Niroula or Lum (or someone acting on their behalf) recorded these

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deeds with the San Francisco County Recorder’s office on Jan 16 2009 in serial recording document-

number succession (2009-1707975, 6, & 7), paying the full San Francisco (city and county)

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4 || documentary transfer tax for each one ($4,879 each for ## 4802 and 4902 and $6,117 for # 5501).
5 No transfer of title to the real properties actually took place, regardless of recording, because
6 || the deeds were forgeries and thus invalid as a matter of law. All were unlawful and ineffective to
7 || bind Hwang who was completely unaware of what was happening. These recorded deeds did,
8 || however, cloud the title.. The story told to Shah and others to explain why these deeds existed was
9 || that Lum was a relative of Hwang (which in truth of course, but unknown to Shah. he was not) and
10 || that the transfer was essentially a gift.

11 The return address in the upper left hand corner of the deeds suspiciously showed that Lum’s
12 }| address was located at a private business service “Mail Box Plus” non-residential address on Sutter
13 || Street in San Francisco, instead of the condominium units themselves. Very suspiciously as well,
14 || these deeds clearly represented purported real estate transactions for which there had been no title
15 || insurance issued to anyone. In other words, no escrow was used to make these phony grants and no
16 || title insurance policy was issued by any title insurance company to the grantee Lum or anyone else
17 || in connection with these three obviously interrelated deeds.” These troubling matters appeared on
18 || the face of the deeds.

19 Niroula then arranged for secured financing using the condominiums as collateral. An
20 || escrow was initially opened for this purpose with Tran, who typically used Old Republic Title
21 || Company in connection with title insurance for the escrows where she acted as agent. Niroula asked
22 || Shah for a reference to a loan broker. Shah referred him to a person whom Shah knew and had used
23 || in the past named John Flores (Flores). Flores put Niroula or Lum in contact with another broker
24 || whose investor clients were located in Santa Barbara, California. Flores received a referral fee.

25 The proposed lenders were two related California limited liability companies— Kitco

1 if 2. Normally, a title company escrow order number will appear just below the address of the
Hy cxeer2 {| person to whom the original of the deed is to be mailed by the recorder after recording.

Crate J Basser
25 W. Firs Strect
Morgan Hill, CA

95037-4539 -4-
(403) 779-0007 Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings May 17, 2017wv

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Law Offices of 27
CRAIG J. BASSETT
25 W, First Strect
Morgan Hill, CA
95037-4559
(408) 779.0007

Holdings , LLC (Kitco) and DeWitte Mortgage Investors Fund, LLC (DeWitte). Wanting to use
their own familiar personnel to make loans, these lenders opened three escrows with Lawyers Title.
Lawyers Title acted as the escrow holder for these escrows which eventually closed on Mar 05
2009— each one a financing escrow related to each of the high-rise condominiums. The parties to
the escrow were Lum and these lenders. These private lenders loaned on the basis of equity, and not
on the financial creditworthiness of the borrower Lum. The amount borrowed and secured by the
respective properties was $550,000 for each of the lower units and $1,100,000 for the penthouse unit,
for a total original principal loaned of $2.2M.

Before making the loan, as part of their due diligence, the lenders or their broker ordered
appraisals which were done after the designated appraiser(s) visited the units gaining access by
asking the building manager to let them in, which he did. Niroula was present for two of these in
late January 2009. Niroula and Shah were present on the third appraisal (for # 4802) in mid-
February 2009. Shah was a person interested in the outcome. He believed Niroula owed him a
substantial amount of money for helping Niroula to make bail in a previous felony arrest. Shah
claims to this day that he had no knowledge of the forged deeds. On Feb 24 2009 Niroula also made
another site visit to the units, this time with representatives of the lenders.

At close on Mar 05 2009, ALTA Loan Policies (2006 version) were issued by
CommonWealth to Kitco and DeWitte including 115.1, 110.9, and 100.2 endorsements. The amount
of each policy was shown respectively as $550,000, $687,500 (80% of which equals $550,000) and
$1,375,000 (80% of which equals $1,100,000). Strangely, although DeWitte was named as insured
on the policies issued affecting units 4802 and 4902 and Kitco named as insured on the one affecting
unit 5501, all three deeds of trust from Lum to a third party trustee (PLM Lender Services, Inc.)
showed that they were made for the benefit of Kitco on/y (not DeWitte). This shows the
commonalty of interest between Kitco and DeWitte.

CommonWealth knew or should have known that the grant deeds purportedly vesting title
in Lum were uninsured deeds. As well as the suspicious matters shown on the face of the deeds,
despite being under a clear duty to investigate, CommonWealth did not verify that they were genuine

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Law Offices of 27
CRAIG J. BASSETT
25 W, First Strect
Morgan Hill, CA
95037-4559
(408) 779.0007

by contacting Hwang personally to ask her to certify that the deeds represented her intent. This is
a common and standard required practice in the title insurance industry when faced with a previous
uninsured transaction, especially one so recent— Jan 16 2009 grant deeds recorded without an
escrow and without title insurance; compared to Mar 05 2009 deeds of trust recorded 48 days later.
CommonWealth fell far below the standard of care in the industry and negligently opened itself to
its own harm suffered later on.

Shah was nota party to the Lawyers Title escrows. Lum signed instructions at Lawyers Title
regarding disbursements of net proceeds from the refinances. At close, money went to Niroula, the
brokers, the lenders, the title company, the title insurer, and a substantial sum of about $1.7M was
transferred to Tran’s Escrow service. Acting under instructions from Shah, Tran then disbursed
about $600,000 to Martini & Chnoogle, about $870,000 to a company called “Lum International”,
and about $225,000 to Lum personally. From the money which went to Martini & Chnoogle, Shah
instructed has attorney Emerich to write checks to various persons for various purposes. The money
paid to Martini & Chnoogle was used to pay debts and obligations etc. incurred by Shah.

Palomino was a homemaker. She relied on Shah to provide support for her and their
daughters’ living expenses. Palomino helped Shah by sometimes paying workers on the ranch and
by otherwise paying for the upkeep of the ranch on Quimby Road and her residence on 15" Street
in San Jose. A $10,000 check was written by Emerich to Palomino on about Mar 17 2009 and
deposited to her separate bank account. This was used by her for these living and upkeep expenses.
This was no different than the money she received on a regular basis from Shah, in like amounts,
who was gainfully employed in other respects, and upon whom she relied for support and
maintenance. Palomino categorically had no knowledge of any of the activities of her husband in
connection with Niroula or any of the details or substance of the financing transactions affecting the
condominium units in San Francisco located two counties away from her residence in San Jose. She
did not concern herself in her husbands businesses or with his income earning affairs. She played
no part whatever in any of the alleged criminal activities led by Niroula.

On Mar 15 2009 Hwang found out from the building manager about a purported new owner

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Law Offices of 27

(Lum) of the units. With a little investigation into the public record she uncovered Niroula’s
scheme. On Mar 20 2009 Hwang filed two separate lawsuits in the San Francisco Superior Court
against Lum, the lenders respectively Kitco and DeWitte, and the trustee of the deeds of trust (PLM)
to clear the title. The case was a “slam dunk” and she obtained her relief within a matter of months,
However, this caused the lenders to tender claims with CommonWealth since they were then left
with no security as a result of the successful quiet title actions of Hwang.

CommonWealth Land Title Insurance Company is a Nebraska corporation. To settle the
lenders’ valid title insurance claims, on Jul 19 2010 it paid DeWitte $576,439 ($27K more than the
policy limit amount), plus $576,788, and on Jul 27 2010 paid Kitco $1,153,592 for a total payout of
$2,306,819. These lenders were apparently paid money from the Lawyers Title escrow at close as
advance payments of interest due on the lucrative loans. This mitigated their harm. Premiums for
the lenders’ title insurance policies and fees charged by CommonWealth’s underwritten title
company (Lawyers Title) also came from the loaned funds of course.

Shah and Lum were later convicted in about 2012 of felonies and are serving time. Because
of his disability Shah is incarcerated in the Medical Facility in Vacaville. Palomino was not arrested.
She was never charged with any crime. She had no knowledge of any of her husband’s dealings
with Niroula. She knew nothing about the San Francisco high-rise condominium transactions.

On Sep 08 2010 CommonWealth, under principles of subrogation, sued FedEx, Lum,
Niroula, Shah, Palomino, Emerich and others. Palomino filed a general denial answer alleging
various standard affirmative defenses, like mitigation of damages and contributory negligence. The
operative pleading of its second amended complaint (SAC) was filed on Jan 02 2014. That pleading
contains two (2) causes of action directed against Palomino (as well as against other defendants).
The first is labeled “Conversion”. CommonWealth alleges that Palomino received $14,000 from
Martini & Chnoogle. That is the extent of the substantive allegations affecting her. As a matter of
pleading, this does not adequately establish all of the elements of a cause of action for conversion
against Palomino as discussed below, as a matter of law, let alone as a matter of fact.

The second is labeled “Unjust Enrichment”. CommonWealth alleges that Emerich paid

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Palomino from the Martini & Chnoogle account on Mar 17 2009 the sum of $14,000. From this
single factual allegation, CommonWealth alleges in conclusory fashion that Palomino was “unjustly
enriched” at its expense. This likewise does not adequately establish all of the elements of a cause
of action for unjust enrichment against Palomino as a matter of law as discussed below.

This civil case was on hold during the pendency of the criminal action against Lum, Shah,
and Emerich and then during the pendency of the appeal taken by Shah and Lum to their criminal
convictions. In July 2016 the First District Court of Appeal affirmed Lum’s and Shah’s convictions,

with modifications. This matter was then set for trial on Jun 12 2017. On May 04 2017

CommonWealth filed and served a motion for judgment on the pleadings against Palomino and

others. Hearing is set for May 31 2017 on that matter as shown above.

i. Law and Analysis.
1. The Statutory Motion for Judgment on the Pleadings is Untimely.

Commonwealth refers in its notice of motion to Code of Civil Procedure section
“483(c)(1)(a)”. There is no such code section. Although apparently a typographical error
transposing two numerals, one would think that the moving party would have exercised more care
in stating the statutory basis for its motion. It is with this same lack of care that CommonWealth
asks for a judgment against Palomino based on nothing more than that her husband was convicted
of crimes. CommonWealth wants to win by nothing more than its own say-so against Palomino.
The court cannot grant this request any more than can grant judgment without the introduction at trial
of defensive evidence produced by Palomino.

Code of Civil Procedure section 438, which is the statute governing motions for judgment
on the pleadings, at subdivision (e) provides: “(e) No motion may be made pursuant to this section
... within 30 days of the date the action is initially set for trial, ... unless the court otherwise
permits.” [Code Civ. Proc., § 438, subd. (e).] The trial date herein, although not the initial date,
nevertheless, is set by noticed order for Jun 12 2017. Thirty (30) days before that date (considering
next court day) is Monday, May 15 2017. The current motion by plaintiff CommonWealth for

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Law Offices of 26
CRAIG J. BASSETT
25 W, First Strect
Morgan Hill, CA

95037-4559

(408) 779.0007

judgment on the pleadings, expressly founded upon statute, is set for hearing sixteen (16) days later
than this deadline. The motion is therefore untimely and patently unfair to defendant Palomino who
should be spending time preparing for trial, not responding to hastily put together last-minute

motions which have no merit.

2. Collateral Estoppel Does Not Apply to Palomino.

Collateral estoppel, or issue preclusion, precludes the relitigation of issues argued and
decided in prior proceedings. [Hernandez v. City of Pomona (2009) 46 Cal.4th 501 (Hernandez).]
“ ‘Traditionally, we have applied the doctrine only if several threshold requirements are fulfilled.
First, the issue sought to be precluded from relitigation must be identical to that decided in a former
proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it
must have been necessarily decided in the former proceeding. Fourth, the decision in the former
proceeding must be final and on the merits. Finally, the party against whom preclusion is sought
must be the same as, or in privity with, the party to the former proceeding. [Citations.]’ [Citation.]”
{Zd.] “ ‘The “identical issue” requirement addresses whether “identical factual allegations” are at
stake in the two proceedings, not whether the ultimate issues or dispositions are the same.
[Citation.]’ [Citation.]” [Hernandez, supra, at pp. 511-512.]

“Even if the minimal requirements for application of collateral estoppel are satisfied, courts
will not apply the doctrine if considerations of policy or fairness outweigh the doctrine’s purposes
as applied in a particular case ([Lucido v. Superior Court (1990) 51 Cal.3d 335, ] 342-343 [272
Cal.Rptr. 767, 795 P.2d 1223]), or if the party to be estopped had no full and fair opportunity to
litigate the issue in the prior proceeding. (Bostick v. Flex Equipment Co., Inc. (2007) 147
Cal.App.4th 80, 97 [54 Cal.Rptr.3d 28]; Goitlieb v. Kest (2006) 141 Cal.App.4th 110, 148 [46
Cal.Rptr.3d 7].)” [Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82.]

“Privity is a concept not readily susceptible of uniform definition. Traditionally it has been
held to refer to an interest in the subject matter of litigation acquired after rendition of the judgment
through or under one of the parties, as by inheritance, succession or purchase. [Citation.] The

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Law Offices of 27
CRAIG J. BASSETT
25 W, First Strect
Morgan Hill, CA

95037-4559

(408) 779.0007

concept has also been expanded to refer to a mutual or successive relationship to the same rights of
property, or to such an identification in interest of one person with another as to represent the same
legal rights [citations] and, more recently, to a relationship between the party to be estopped and the
unsuccessful party in the prior litigation which is ‘sufficiently close’ so as to justify application of
the doctrine of collateral estoppel [citations].

“Notwithstanding expanded notions of privity, collateral estoppel may be applied only if due
process requirements are satisfied. [Citations.] In the context of collateral estoppel, due process
requires that the party to be estopped must have had an identity or community of interest with, and
adequate representation by, the losing party in the first action as well as that the circumstances must
have been such that the party to be estopped should reasonably have expected to be bound by the
prior adjudication. [Citation.] Thus, in deciding whether to apply collateral estoppel, the court must
balance the rights of the party to be estopped against the need for applying collateral estoppel in the
particular case, in order to promote judicial economy by minimizing repetitive litigation, to prevent
inconsistent judgments which undermine the integrity of the judicial system, or to protect against
vexatious litigation. [Citations.]” [Clemmer v. Hartford Insurance Co. (1978) 22 Cal.3d 865, 875.]

Moreover, “[a] person who is not a party but who controls an action, individually or in
cooperation with others, is bound by the adjudications of litigated matters as if he were a party if he
has a proprietary or financial interest in the judgment or in the determination of a question of fact
or of a question of law with reference to the same subject matter or transaction...” [Code Civ. Proc.,
§ 1908, subd. (b); see Minton v. Cavaney (1961) 56 Cal.2d 576, 581.]

Palomino was not a criminal defendant in the proceedings against Shah. She had no
knowledge of his allegedly criminal actions. She did not benefit personally from his actions. His
income from other sources supported her for many many years. Receiving money from an account
controlled by Shah’s attorney does not prove that she converted anyone else’s money or that she was
unjustly enriched. Palomino did not have any representation in the criminal proceedings. They were
not directed against her. She did not testify in those proceedings. She was not “guilty” of anything.
She was Shah’s wife and that is all.

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Law Offices of 27
CRAIG J. BASSETT
25 W, First Strect
Morgan Hill, CA

95037-4559

(408) 779.0007

Most importantly, the issues in this civil case of conversion allegedly committed by Palomino
and unjust enrichment allegedly retained of Palomino were not actually litigated in the least in the
criminal proceedings against Shah et a/. Unjust enrichment is essentially an equitable cause of
action as further discussed below. Nothing was adjudicated to balance equities affecting Palomino.
She did nothing on her part at all, other than end up with a few thousand dollars, which moreover
she used in substantial part to pay expenses incurred by her husband Shah in any event.
Common Wealth’s stretch by pointing to possible enrichment because of paid loans affecting real
property owned by her and her parents in Los Baijios is not only unproved, but utterly fails to take
into consideration that the current equity in these properties belongs entirely to Palomino and her
parents respectively, because they and they alone paid for these properties with their own money
obtained from the sale of their residences in Texas. There is nothing about their ownership of these
properties which is or was in the final analysis substantively affected by Shah or Emerich’s financial
activities.

Even if, arguendo, collateral estoppel could be said to apply to Palomino, which it cannot
in this instance, policy and fairness would step in to deny its application to her particular
circumstances as a completely innocent recipient of money. Safeway and In-N-Out Burger
undoubtedly received some of the money potentially traceable from the refinance escrow at Lawyers
Title. How far is this court willing to go to impose liability on downstream recipients? Should
Safeway and In-N-Out Burger owe CommonWealth for food purchased from those businesses?
Absurd. It is no less absurd to impose hundreds of thousands of dollars of liability in this case on
Palomino with nothing more than a remote “paper trail” of money. Besides, that is not the sole test
of either conversion or unjust enrichment— that someone got some money. The court of appeal in
the Shah/Lum appeal talks about many other individuals and entities who received money. They
were not on trial and they are not liable to CommonWealth any more than Palomino is.

CommonWealth, in support of its motion for judgment on the pleadings, supplies nothing
more to this court as evidence than third-party hearsay allegations of a criminal investigator,
commented upon in footnotes in an unpublished opinion of a court of appeal, in a decision which

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CRAIG J. Bassett
25 W, First Strect
Morgan Hill, CA
95037-4559
(408) 779.0007

neither named nor involved Palomino nor affected her personally. There is no possible reasonable
way to find that collateral estoppel applies to Palomino in this case. This disposes of the motion

which must be denied on this basis alone.

3. CommonWealth Fails to Allege Facts Sufficient to Constitute Conversion
Against Palomino as a Matter of Law, Let Alone Establish Such Facts by Any
Legitimate Evidentiary Means Before Trial.

CommonWealth, as a matter of law, has not alleged facts sufficient to constitute a cause of
action for conversion against Palomino. It therefore cannot obtain a judgment against her based on
that pleading.

“<“ ‘Conversion is the wrongful exercise of dominion over the property of another. The
elements of a conversion claim are: (1) the plaintiff's ownership or right to possession of the
property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3)
damages....’” ‘ (Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208.)” [Lee v. Hanley
(2015) 61 Cal.4th 1225, 1240.]

Under California law, “ ‘[m]oney cannot be the subject of a cause of action for conversion
unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money
to be paid to another and fails to make the payment. [Citation.] ‘... Fischer v. Machado (1996) 50
Cal.App.4th 1069, 1072-1074 [sales agent liable for conversion of proceeds from consignment sale
of farm products]; Software Design & Application, Ltd. v. Hoefer & Arnett, Inc. (1996) 49
Cal. App.4th 472, 485 [‘money cannot be the subject of a conversion action unless a specific sum
capable of identification is involved.’].) A ‘generalized claim for money [is] not actionable as
conversion.’ (Vu v. California Commerce Club, Inc. (1997) 58 Cal.App.4th 229, 235; 5 Witkin,
Summary of Cal. Law (10th ed. 2005), Torts, § 703, pp. 1026-1027.)” [PCO, Inc. v. Christensen,
Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395 (PCO).]

The tort of conversion “is derived from the common law action of trover. The gravamen of
the tort is the defendant’s hostile act of dominion or control over a specific chattel to which the

plaintiffhas the right of immediate possession. (See generally, Rest.2d Torts, § 222A, com. a, p. 431;
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Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings May 17, 2017wv

we

26

Law Offices of 27
CRAIG J. BASSETT
25 W, First Strect
Morgan Hill, CA
95037-4559
(408) 779.0007

1 Dobbs, The Law of Torts (2001), § 59, pp. 121-122.) That is why money can only be treated as
specific property subject to being converted when it is ‘identified as a specific thing.’ [Baxter v. King
(1927) 81 Cal.App. 192, 194 [‘It is true that sometimes money can be treated as specific property,
and where identified can form the basis of an action for conversion and might also be the subject of
an action for the specific recovery of personal property’].)” [PCO, supra, 150 Cal.App.4th at p. 395.]

The “California Supreme Court [has] stated, “While it is true that money cannot be the
subject of an action for conversion unless a specific sum capable of identification is involved
[citation], it is not necessary that cach coin or bill be earmarked.’ (Haigler v. Donnelly [(1941)] 8
Cal.2d [674, ] 681.) This statement appears to be in conformity with the modern view of the law. As
one authority wrote: ‘Identifiable, specific coins or bills are subject to conversion if they are
identifiable as the particular coins or bills taken from the plaintiff. The old idea that money could
be converted only if it was in a “bag” now seems obsolete. Today, it might be plausible to say that
when the defendant commits an affirmative act and physically takes control of particular paper
monies he is guilty of conversion, even if the particular bills or coins cannot be identified. Certainly
the plaintiff is entitled to recover on some theory, even if not on the basis of conversion.’ (1 Dobbs,
The Law of Torts, supra, § 63, pp. 132-133, fns. omitted.)” [PCO, supra, 150 Cal.App.4th at p. 396.]

California cases “permitting an action for conversion of money typically involve those who
have misappropriated, commingled, or misapplied specific funds held for the benefit of others. (See,
e.g., Haigler v. Donnelly, supra, 18 Cal.2d at p. 681 [real estate broker[, while acting as agent for
lessors, retained funds received from lessee]]; Fischer v. Machado, supra, 50 Cal.App.4th at pp.
1072-1074 [sales agent for consigned farm products]; Weiss v. Marcus (1975) 51 Cal.App.3d 590,
599 [attorney’s claim for $6, 750 fee from proceeds of settlement subject to lien]; Watson v. Stockton
Morris Plan Co. (1939) 34 Cal.App.2d 393, 403 [savings and loan issued duplicate passbook and
delivered funds to third party].) In each of these cases, the amount of money converted was readily
ascertainable.” [PCO, supra, 150 Cal.App.4th at p. 396.]

In contrast, “actions for the conversion of money have not been permitted when the amount
of money involved is not a definite sum. (Vu v. California Commerce Club, Inc., supra, 58

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Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings | May 17, 2017wv

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26

Law Offices of 27

Cal.App.4th at p. 235; Software Design & Application, Ltd. v. Hoefer & Arnett, Inc., supra, 49
Cal.App.4th at p. 485 [no conversion where money was allegedly misappropriated ‘over time, in
various sums, without any indication that it was held in trust for’ plaintiff];.... For example, in Vir
v. California Commerce Club, Inc., supra, 58 Cal.App.4th 229, the court affirmed a [defense]
summary judgment on a conversion claim [brought by] two gamblers who lost ‘approximately $1.4
million’ and ‘approximately $120, 000, ‘ respectively, at a specific card club during specified periods
of time, due to alleged cheating. (Id. at pp. 231-232.) The [Vu] court held, ‘neither by pleading nor
responsive proof did plaintiffs identify any specific, identifiable sums that the club took from them.
That rendered the generalized claim for money not actionable as conversion.’ (Id. at p. 235.)” [PCO,
supra, 150 Cal.App.4th at pp. 396-397.]

The allegations of the civil complaint (SAC) filed by CommonWealth herein do not allege
any wrongful conduct whatever against Palomino in order to establish liability against her for
conversion. CommonWealth naively thinks that anyone whomsoever downstream who received
money from Martini & Chnoogle essentially must “give it back”. That is not proof in any respect
of wrongful conduct on the part of the recipient. Palomino did not “take” any money from Martini
& Chnoogle. She did not ask for it. She did not even use it for her own benefit proper.
CommonWealth’s claim for conversion against Palomino is not well pled because it has not even
pled, let alone established, that Palomino owes money to CommonWealth for some understandable
reason based on her wrongful conduct or that she knew that the money belonged to CommonWealth
when she spent it for the benefit of her husband and her children. She did not in any way interfere
with CommonWealth’s imagined possessory interest in a specific, identifiable sum, such as when
a trustee or agent misappropriates the money entrusted to him. The money which came from the
lenders went into Lawyers Title escrow. It went from there to Tran’s Escrow Services, and from
there to Martini & Chnoogle. Why isn’t Tran named as a defendant herein and liable to
CommonWealth if the theory is that anyone who merely touches the money is liable? It makes no
sense that the gravamen of an action for conversion is simply touching money. The money used by
Palomino consisting of a few thousand dollars was her’s to do with as she pleased.

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Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings May 17, 20171 4, Palomino Is Likewise Not Liable for Unjust Enrichment.

we

Unjust enrichment is a common law obligation implied by law based on the equities of a

articular case and not on any contractual obligation. [McBride v. Boughton (2004) 123 Cal.App.4th

we

4 || 379, 388-389.] Whether termed unjust enrichment, quasi-contract, or quantum meruit, the equitable
5 || remedy of restitution when unjust enrichment has occurred “is an obligation (not a true contract
6 citation]) created by the law without regard to the intention of the parties, and is designed to restore
7 || the aggrieved party to his or her former position by return of the thing or its equivalent in money.”
8 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 1013, p. 1102.] “Even when a person
9 || has received a benefit from another, he is required to make restitution ‘only if the circumstances of

10 |] its receipt or retention are such that, as between the two persons, it is unjust for him to retain it.’

il Citation.] [{] Thus, a party who does not know about another’s mistake, and has no reason to
12 || suspect it, may not be required to give up the benefit if he also relied on it to his detriment. ... [4]
13 || In other circumstances, however, the party benefiting from a mistake of fact may ... not be entitled
14 |] to retain what amounts to a mere windfall.” [Ghirardo v. Antonioli (1996) 14 Cal 4th 39, 51-52.]

15 It is anything but established in this case as a fact that Palomino received a windfall of any
16 || kind as to money received from Martini & Chnoogle. CommonWealth does not even plead that
17 || element. There is nothing pled, and nothing found in the criminal case which would establish that
1g || Palomino knew anything whatever about her husbands activities in relation to the condominiums or
19 || the financing escrows associated with them, She is therefore not liable for “unjust enrichment” to
20 || CommonWealth who defalcated in its fiduciary duty to the lenders to verify the genuiness of the
21 || grant deeds recorded without an escrow and without title insurance and under circumstances
22 || otherwise very suspicious. Undoubtedly, CommonWealth’s underwritten title company (Lawyers
23 || Title) was only “in it for the money and because a regular customer asked it to perform escrow
24 || services”. It too did not do its job. Where in its analysis does CommonWealth treat these highly

25 || relevant factual issues? It does not. Judgment on the pleadings is precluded here.

26 || Dated: May 17, 2017
ey et Craig J. Bassett, Attorney for Palomino

CRAIG J. Bassett
25 W. Firs Strect
Morgan Hill, CA
95037-4539 7 1S-
(403) 779-0007 Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings | May 17, 201726
Law Offices of.
ches tasser??
29 W First Street.
Morgan Hill, CA
95037-4559
(408) 779-0007

4. Palomino Is Likewise Not Liable for Unjust Enrichment.

Unjust enrichment is a common law obligation implied by law based on the equities of a
particular case and not on any contractual obligation. [McBride v. Boughton (2004) 123 Cal.App.4th
379, 388-389.] Whether termed unjust enrichment, quasi-contract, or quantum meruit, the equitable
remedy of restitution when unjust enrichment has occurred “is an obligation (not a true contract
[citation]) created by the law without regard to the intention of the parties, and is designed to restore
the aggrieved party to his or her former position by return of the thing or its equivalent in money.”
[| Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 1013, p. 1102.] “Even when a person
has received a benefit from another, he is required to make restitution ‘only if the circumstances of
its receipt or retention are such that, as between the two persons, it is unjust for him to retain it.”
{Citation.] []] Thus, a party who does not know about another’s mistake, and has no reason to
suspect it, may not be required to give up the benefit if he also relied on it to his detriment. ... [{]
In other circumstances, however, the party benefiting from a mistake of fact may ... not be entitled
to retain what amounts to a mere windfall.” [Ghirardo y. Antonioli (1996) 14 Cal.4th 39, 51-52.]

It is anything but established in this case as a fact that Palomino received a windfall of any
kind as to money received from Martini & Chnoogle. CommonWealth does not even plead that
element. There is nothing pled, and nothing found in the criminal case which would establish that
Palomino knew anything whatever about her husbands activities in relation to the condominiums or
the financing escrows associated with them. She is therefore not liable for “unjust enrichment” to
CommonWealth who defalcated in its fiduciary duty to the lenders to verify the genuiness of the
grant deeds recorded without an escrow and without title insurance and under circumstances
otherwise very suspicious. Undoubtedly, CommonWealth’s underwritten title company (Lawyers
Title) was only “in it for the money and because a regular customer asked it to perform escrow
services”. It too did not do its job. Where in its analysis does CommonWealth treat these highly

relevant factual issues? It does not. Judgment on the pleadings is precluded here.

Dated: May 17, 2017

Craig J.

Aa.
Opposition of Defendant Palomino to Motion by Plaintiff Commonwealth for Judgment on the Pleadings May 17, 2017

sett, Attorney for Palomino