Jogani v. Jogani

• Decision Date: 10 July 2006
• Docket Number: No. B181246.,B181246.
• Citation: 45 Cal.Rptr.3d 792,141 Cal.App.4th 158
• Court: California Court of Appeals Court of Appeals
• Parties: Shashikant JOGANI, Plaintiff and Appellant, v. Haresh JOGANI et al., Defendants and Respondents.

45 Cal.Rptr.3d 792

141 Cal.App.4th 158

Shashikant JOGANI, Plaintiff and Appellant, v. Haresh JOGANI et al., Defendants and Respondents.

No. B181246.

Court of Appeal, Second District, Division 1.

July 10, 2006.

Horvitz & Levy, Frederic D. Cohen, Andrea M. Gauthier, Encino; Krane & Smith and Samuel Krane, Encino, for Plaintiff and Appellant.

Jones Day, Elwood Lui, Scott D. Bertzyk, Los Angeles, and Karin L. Bohmholdt for Defendants and Respondents.

MALLANO, J.

In 1995, plaintiff allegedly entered into an oral partnership agreement to manage his brothers' real estate business. According to plaintiff, he was eventually to receive 50 percent of the partnership's "profits, proceeds, and value" if he succeeded in recouping his brothers' investment plus a 12 percent return. Plaintiff contends he accomplished that goal in 2001 but was not paid in accordance with the partnership agreement. In 2003, he filed this action against his brothers, other relatives, and their real estate companies, seeking $250 million.

Meanwhile, in the 1990's, plaintiff's own business pursuits resulted in several lawsuits and judgments against him. In connection with two of the judgments, he testified at judgment debtor examinations in 1998. During the examinations, he did not mention his involvement in, or the existence of, the partnership. The judgment creditors settled the cases for significantly less than the amounts of the judgments.

Defendants moved for summary judgment based on the doctrine of judicial estoppel, which protects the integrity of the judicial process by preventing a party from taking inconsistent positions in separate cases. The trial court granted the motion, reasoning that plaintiff's failure to mention the partnership at the judgment debtor exams barred his claim to a portion of the partnership's business. We conclude that, in accordance with the principles of judicial estoppel, the summary judgment must be reversed because the courts that ordered the exams did not adopt or accept the truth of plaintiff's testimony, eliminating any threat to judicial integrity.

Further, consistent with the equitable nature of judicial estoppel, the continued prosecution of this action serves the interests of plaintiff's judgment creditors, who may have been misled by his debtor exam testimony. The judgment creditors may be able to recover damages or rescind the settlements based on the statements plaintiff made as a judgment debtor.

I BACKGROUND

The following allegations are taken from the pleadings and the facts from the evidence submitted on the summary judgment motion.

A. The Complaint

In 1979, plaintiff Shashikant Jogani (who prefers to be called Shashi on appeal) began investing in residential apartment properties in and around Los Angeles County. By 1989, he owned properties having a fair market value of $375 million and a net equity of $100 million. Because of an economic recession that started in the late 1980's and continued into the mid-1990's, Shashi faced defaults and foreclosures on valuable properties.

In April 1995, Shashi entered into a general partnership (Partnership) pursuant to an oral agreement (Partnership Agreement) with his brothers, Haresh Jogani, Rajesh Jogani, Chetan Jogani, and Sailesh Jogani. Shashi transferred ownership of his properties to the Partnership. Thereafter, the properties were held nominally by several corporations created for that purpose, namely, J.K. Properties, Inc., H.K. Realty, Inc., Hansa Investments, Inc., Commonwealth Investment, Inc., Mooreport Holdings Limited, and Gilu Investments Limited (collectively Partnership Entities). Under the Partnership Agreement, the Partnership actually owned these corporations notwithstanding nominal ownership in the names of certain of Shashi's brothers and other relatives.

Shashi agreed to act exclusively as a consultant for the Partnership, managing its properties and acquiring additional properties for investment purposes. Shashi transferred three separate life insurance policies (worth $1 million each) to his brother Haresh as the nominal owner, transferred title to his residence to H.K. Realty, and transferred a securities account to Haresh and H.K. Realty.

For their part, Shashi's brothers agreed to provide the capital needed to acquire Shashi's properties and to fund his acquisition of additional properties for the Partnership. They also agreed to pay Shashi a monthly sum for his services as a consultant. He often did not receive the consulting fee.

Shashi's brothers were to receive all proceeds ("profits, sale, refinancing") until they recouped their investment plus a return of 12 percent. Once that occurred, Shashi was to receive one-half of all "profits, proceeds, and value" concerning the Partnership and its properties. In November 2001, after several years of work, Shashi became entitled to his 50 percent share. He was paid $2.4 million at that time.

In June 2002, the Partnership owned properties having a fair market value in excess of $1 billion and a net equity of around $550 million. Under the Partnership Agreement, Shashi was entitled to $225 million. Nevertheless, Haresh, acting on behalf of himself and the other brothers, refused to honor the Partnership Agreement, removed Shashi from management of the Partnership's properties, and recharacterized the $2.4 million payment as a loan, demanding it be repaid.

In February 2003, Shashi filed this action against his brothers, other relatives, and the Partnership Entities. Apparently, Haresh, one other relative, and the Partnership Entities (collectively defendants) were the only ones to make an appearance. A second amended complaint (complaint) was filed later in 2003, alleging causes of action for breach of contract, breach of fiduciary duty, fraud, conspiracy to commit fraud, dissolution of partnership, quantum meruit, unjust enrichment, and constructive trust. Each cause of action was premised on the existence of the Partnership and a breach of the Partnership Agreement. Shashi estimated his damages to be at least $250 million.

After filing an unsuccessful demurrer and motion to strike portions of the complaint defendants filed an answer generally denying all allegations. (See Code Civ. Proc., § 431.30, subd. (d).) Haresh and certain of the Partnership Entities filed a cross-complaint against Shashi, alleging mismanagement. Shashi filed a general denial. (See id.)

B. Motion for Summary Judgment

On June 8, 2004, defendants filed a summary judgment motion, contending that judicial estoppel barred this action, and, alternatively, the oral partnership agreement was unenforceable because it was intended to defraud creditors. Shashi filed opposition papers. We accept as true the following facts and reasonable inferences supported by Shashi's evidence and defendants' undisputed evidence. (See Raghavan v. The Boeing Co. (2005) 133 Cal.App.4th 1120, 1125, 35 Cal.Rptr.3d 397.)

By the mid-1990's, the equity in Shashi's real estate holdings had fallen from $100 million to a negative $50 to $70 million. There were several lawsuits against him, brought by tenants, creditors, employees, and an insurance company. By 1998, many creditors had obtained judgments against him.

At his deposition in this case, taken in April and May 2004, Shashi testified he became a general partner in the Partnership when it was formed in April 1995, as did his brothers. Since April 1995, Shashi continuously has been a part owner of the Partnership, which owns the real estate acquired from him as well as the properties subsequently purchased as a result of his consulting work. The real estate was nominally held by the Partnership Entities, such as J.K. Properties and H.K. Realty. Since April 1995, Shashi has also continuously been a part owner of the Partnership Entities. Haresh supervised the operations of the Partnership and the Partnership Entities on behalf of the other brothers. If Haresh had tried to sell J.K. Properties at any point, Shashi would have filed suit based on his 50 percent ownership interest in the Partnership, which owned J.K. Properties.

In May 1997, the plaintiff in Cappucci v. Jogani (Super.Ct.L.A.County, 1996, No. BC143725) (Cappucci) secured a judgment against Shashi of around $639,000. The plaintiff questioned Shashi at a judgment debtor examination held on February 23, 1998, and March 9, 1998, at the county courthouse.

At the judgment debtor exam, Shashi was asked to identify "any entity in which you've ever owned any interest." He did not mention the Partnership or the Partnership Entities. He specifically stated he did not have "any interest" in J.K. Properties or H.K. Realty. Shashi testified that none of his family members owned any real property with him, nor did they own any real property with an entity in which he held an interest. When asked if he was presently a party to "any kind" of contract or agreement, he answered, "No." Shashi was also asked, "Are you involved in any joint ventures." He replied, "I wish, no." He later testified in this case that he believed "joint venture" is "the same as partnership."

After the judgment debtor exam, the plaintiff in Cappucci did not attempt to reach any interests Shashi had in the Partnership or the Partnership Entities, and she settled for $50,000. More specifically, one of the Partnership Entities purchased the $639,000 judgment for that sum.

In or about 1996, the plaintiff in Weyerhauser Financial Investments v. Jogani (Super.Ct.L.A.County, 1996, No. BC143926) (Weyerhauser) obtained a judgment against Shashi for about $644,000. In connection with Weyerhauser, Shashi was questioned at a judgment debtor examination conducted on March 23, 1998, and April 13, 1998, at the county courthouse.

At the exam, Shashi was asked if he was "currently a partner in any partnership." He said he was a 1 percent limited partner in four or five limited partnerships. He identified each by name. He did not mention the Partnership....