Augustyn v. Superior Court

• Decision Date: 05 November 1986
• Citation: 186 Cal.App.3d 1221,231 Cal.Rptr. 298
• Court: California Court of Appeals Court of Appeals
• Parties: John J. AUGUSTYN, Petitioner, v. SUPERIOR COURT, etc., County of San Diego, Respondent; James A. EDMONDS, as Real Estate Commissioner, etc., Real Party in Interest. D005029.

Page 298

231 Cal.Rptr. 298

186 Cal.App.3d 1221

John J. AUGUSTYN, Petitioner, v. SUPERIOR COURT, etc., County of San Diego, Respondent James A. EDMONDS, as Real Estate Commissioner, etc., Real Party in Interest.

D005029.

Court of Appeal, Fourth District, Division 1, California.

Nov. 5, 1986.

As Modified Nov. 17, 1986.

Review Denied Dec. 31, 1986.

Klitgaard & Jones, Robert J. Klitgaard, San Diego, for petitioner

No appearance for respondent.

John K. Van de Kamp, Atty. Gen., Edmond B. Mamer and Neal J. Gobar, Deputy Attys. Gen., for real party in interest.

LEWIS, Associate Justice.

The California State Real Estate Commissioner petitioned under BUSINESS AND PROFESSIONS CODE SECTION 10474.5¹ to consolidate all claims against the Commissioner's Recovery Fund (Fund) involving alleged fraudulent conduct of broker Wayne Burton and his agents, and to prorate the recoveries of individual claimants against the Burton fund. The claims exceeded the available funds in that account. On May 9, 1986, the matter was assigned for all purposes to Judge Jack R. Levitt. On July 25, 1986, he determined on a motion for declaratory relief the legal issue whether a claimant defrauded by one of Burton's licensed agents could recover against both the agent's account and the Burton account. Judge Levitt determined only one recovery, against the Burton fund, was allowable under sections 10471 and 10474.

Petitioner, John J. Augustyn, claims he was defrauded by licensed sales agent Gulve, an employee of Burton's. After Judge Levitt decided the declaratory relief issue, Augustyn filed a peremptory challenge against Judge Levitt under Code of Civil Procedure section 170.6. Judge Levitt denied the challenge as untimely.

Augustyn now seeks writs of mandate and prohibition, contending (1) Judge Levitt wrongly decided that only one recovery against the Fund for each claimant is permitted, and (2) the challenge to the judge was timely, within the doctrine of Zdonek v. Superior Court (1974) 38 Cal.App.3d 849, 113 Cal.Rptr. 669.

We have determined (1) the ruling regarding recovery against the agent's Fund account is not properly reviewable at this time and (2) the challenge to Judge Levitt was not timely. Accordingly, no writ will issue.

I. The Declaratory Relief Judgment

The agreed facts for purposes of these preliminary proceedings show one Wayne Burton, a licensed real estate broker, began in 1980 to perpetuate a statewide Ponzi scheme persuading investors to purchase second trust deeds supposedly secured by equity in California real estate but in fact either not secured at all or far more risky than what had been promised. Many misrepresentations were made regarding the nature and worth of the underlying securities. Burton had eight offices stretching from Sacramento to San Diego staffed with investment counselor employees, some independently licensed, some not.

According to Augustyn, by the time the SEC intervened and imposed a receivership, some 6,000 California consumers had purchased $100,000,000 in promissory notes from approximately 36 real estate licensees working with Burton.

Augustyn purchased two promissory notes from Kai I. Gulve, a real estate licensee acting as an investment counselor in Burton's organization. Augustyn has secured a judgment against Gulve for losses, but has not sued Burton. Gulve has filed bankruptcy. Unable to recover all of his judgment from Gulve, Augustyn has also sought recovery against the Gulve Recovery The Real Estate Education, Research and Recovery Act (§§ 10470 et seq.) under stated circumstances allows compensation to persons defrauded by real estate licensees. The liability of the Fund is generally limited to $20,000 per transaction and $100,000 for any one licensee, for causes of action accruing after January 1, 1980 (§ 10474, subd. (c)). Where the Recovery Account is insufficient to pay all valid claims against it in full, section 10474.5 authorizes consolidation of all claims into one action and equitable proration of payment.

Account Fund, but has not applied for any recovery against the Burton Recovery Fund.

Here, the Commissioner requested such consolidation of all claims not only against Burton but against all his employees, for purposes of (1) deciding how many recoveries might be available to each claimant and (2) determining the validity of all claims and prorating recovery. The declaration of the Deputy Attorney General representing the Commissioner said the proceeding involves solicitation of funds from more than 5,000 investors by Burton or his corporation, using more than 50 agents, only some of whom were licensed. The basic pattern of each transaction "seems to be the same." The Commissioner asked the court first to resolve the question whether the investors dealing with separately licensed investment counselors should be entitled to additional recoveries against the Fund or whether all claimants defrauded by Burton's scheme should be limited to recovery against the Burton fund. The declaration also stated the need to expedite the proceedings, a need agreed to by attorney Klitgaard, then representing all the applicants named in the consolidation petition.

On May 9, 1986, the court granted the request for joinder of all claims against Burton or any of his investment counselors and stayed all other actions against the fund arising out of the Burton scheme.

After submission of papers and argument, Judge Levitt ruled each claimant would be limited to one recovery, against the Burton account in the Fund. The Commissioner argues the decisions in Fox v. Prime Ventures, Ltd. (1978) 86 Cal.App.3d 333, 150 Cal.Rptr. 202 and Deas v. Knapp (1981) 29 Cal.3d 69, 171 Cal.Rptr. 823, 623 P.2d 775 support the ruling. Each decision holds that on its facts only one recovery against the Fund was proper, despite the fortuitous circumstance that more than one licensee participated in defrauding the buyer. The court said in Deas v. Knapp, supra: "[W]here the transaction giving rise to the judgment arose out of acts for which only one license was required, recovery is limited by the amount stipulated in the statute 'for any one licensee.' " (Id. at p. 75, 171 Cal.Rptr. 823, 623 P.2d 775, quoting partly from Fox v. Prime Ventures, Ltd., supra, 86 Cal.App.3d at pp. 334-337, 623 P.2d 775.)

The Commissioner argues preliminary review by extraordinary writ of the declaratory relief decision is inappropriate. The matters were consolidated in order to expedite the decision making process for all parties. The consolidation is still in process. The present declaratory relief ruling, however, was intended to be a final judgment between the Commissioner and the particular applicants now parties, to permit a prompt appeal and resolution of that question as to them. Such an appeal would be the fair and orderly method of review. This petition, it is argued, is brought by only one individual claimant, Augustyn; and if we were to determine the issue as to him, the claims of others would remain for piecemeal determination. Allowing such case-by-case mandate review, the Commissioner says, would be repetitive and wasteful and delay ultimate resolution of the matter.

We agree with the Commissioner that not only does the normal appellate remedy appear to be adequate, but it is the preferred remedy in light of the potential inefficiency II. The Peremptory Challenge to Judge Levitt

                of individual review of each challenge by prerogative writ.  Further, we perceive no obvious or manifest abuse of discretion here;  the court's ruling is supported by the decisions cited, and Augustyn cites no authority directly construing the Recovery Act so as to permit more than one recovery in a situation where, as here, only one license was necessary to complete the transaction.  (See language from Deas v. Knapp, quoted [186 Cal.App.3d 1226]  isupra.)   Accordingly, we conclude writ review of the declaratory relief judgment is unwarranted
                

Here the record shows Judge Levitt was chosen as the judge for all purposes on May 9, 1986. Although the record does not formally reflect actual consent to the assignment of Judge Levitt, respondent asserts in the answer to the petition that Augustyn's attorney Klitgaard agreed to the request for assignment to one judge for all purposes before the presiding judge and Klitgaard suggested Judge Levitt as the judge to be assigned and respondent agreed. That assertion is not denied in the replication to the answer, and we take it to be true. Augustyn did not challenge Judge Levitt until August 8, 1986, after he had already decided the declaratory relief issue. Augustyn did not, at any time, challenge the consolidation of the matters.

Section 170.6 of the Code of Civil Procedure establishes various time limitations for the peremptory challenge of a judge. The general rule is that a motion is permitted any time before the beginning of a trial or hearing. (Los Angeles County Dept. of Pub. Social Services v. Superior Court (1977) 69 Cal.App.3d 407, 412, 138 Cal.Rptr. 43.) Two express statutory exceptions to this rule are the 10-day-5-day rule and the master calendar rule set forth in Code of Civil Procedure section 170.6, subdivision (2). ² The 10- rule provides that "[w]here the judge, court commissioner, or referee assigned to or who is scheduled to try the cause or hear the matter is known at least 10 days before the date set for trial or hearing, the motion shall be made at least five days before that date." (Code Civ. Proc., § 170.6, subd. (2).) The master calendar rule applies to causes assigned from a master calendar and requires in such cases that the challenge be made to the judge supervising the master calendar when the cause is assigned for trial. (See Zdonek v. Superior Court, supra, 38 Cal.App.3d at pp. 851-852, 113 Cal.Rptr. 669.)

The Zdonek decision construed the master...