People ex rel. Harris v. Aguayo

Citation218 Cal.Rptr.3d 221,11 Cal.App.5th 1150
Decision Date26 April 2017
Docket NumberB262557
CourtCalifornia Court of Appeals
Parties The PEOPLE EX REL. Kamala HARRIS, as Attorney General, Plaintiff and Respondent, v. Jesus AGUAYO et al., Defendants and Appellants.

Ronald E. Wiksell, Santa Ana; Law Offices of James T. Duff and James T. Duff, Los Angeles, for Defendants and Appellants.

Kamala D. Harris, Attorney General, Nicklas A. Akers, Assistant Attorney General, Michele Van Gelderen, Steven De Salvo, and William R. Pletcher, Deputy Attorneys General, for Plaintiff and Respondent.

CHAVEZ, Acting P.J.Jesus and Sofia Aguayo (appellants) appeal from a judgment entered after a 22-day bench trial in this civil enforcement action brought by the State of California (the People) against appellants for violation of the unfair competition laws (Bus. & Prof. Code, § 17200 et seq. ) (UCL).1 The action arises out of a complex real estate scam through which appellants acquired and rented real estate belonging to others. This civil proceeding follows two criminal trials which resulted in 31 criminal convictions related to the scheme, 29 of which were felonies.

The People proposed 1,574 violations of the UCL. The court subtracted 27 vandalism violations and two theft violations. The People also proposed 246 enhancements for violations against senior citizens, of which the court subtracted seven. The court imposed a $750 penalty for each of the 1,784 total violations, resulting in a total fine of $1,338,000. The court then added restitution of $2,636,854.50 for a total of $3,974.854.50 in restitution and civil penalties. The court removed appellants' legal and recorded claims to all 43 of the properties that were subjects of the litigation. Finally, the court imposed an injunction permanently enjoining appellants from (1) prosecuting future adverse possession actions or quiet title actions; (2) recording wild deeds; and (3) bidding or buying at property tax sales (with one exception).

Appellants make six main arguments on appeal. First, they argue that their actions in obtaining properties under the law of adverse possession were immune from a UCL action under the Noerr-Pennington doctrine. Second, they argue that the trial court's finding that the "wild" deeds filed by Jesus Aguayo purported to transfer a fictional interest between Jesus Aguayo and Sofia Aguayo was incorrect, as Jesus Aguayo had possession of those properties and thus an actual interest, albeit inferior to the record title holder's interest. Third, appellants argue that they held an absolute, nondivestable interest in seven specific properties which they acquired by adverse possession. Fourth, they argue that the restitution award is not supported by the evidence or the law, as they were entitled to keep the rents they collected. Fifth, they argue that the penalties are excessive. And finally, they argue that the permanent injunction was beyond the court's jurisdiction because it bars legally permitted conduct and constitutes punishment.

We find no reversible error and therefore affirm the judgment.

BACKGROUND

Appellants married in 1972 and raised two children. Jesus Aguayo worked at Security Pacific Bank, rising to the position of Assistant Vice President for the Credit Department. In 1979, Jesus Aguayo started purchasing homes for investment opportunities at tax sales, trustee sales, and from third parties. He obtained a real estate license and a contractor's license in the 1980's.

The scheme

While studying for his real estate license, Jesus Aguayo learned about the laws of adverse possession. Beginning in 1988, appellants began acquiring properties pursuant to the scheme which has resulted in this litigation. Appellants would locate distressed properties in the public records. Thus, their targets were often individuals in the midst of financial misfortune. Their victims included the elderly, the infirm and mentally ill, and heirs of recently deceased titleholders. For example, appellants fraudulently caused several elderly victims to sign grant deeds for zero dollars. In addition, appellants victimized individuals who were hospitalized or living in nursing homes. Other victims were in financial distress or incarcerated.

After locating a distressed property, appellants would go and take possession of the property. Thereafter, appellants would file false documents in an attempt to claim ownership of the property. They typically did this by creating and filing "wild deeds," deeds signed by a grantor who is unconnected to the property. Through these fraudulent documents, Jesus Aguayo, using the name Jesus Duran to obscure his relationship to Sofia Aguayo, would purport to transfer title to Sofia Aguayo for valuable consideration. In fact, Jesus Aguayo had no transferable interest in the property and no money was exchanged. Appellants then filed false Preliminary Change of Ownership Reports (PCOR) to determine transfer taxes and to appraise properties after transfer. (People v. Aguayo (May 29, 2013, B236827) 2013 WL 2322892 [nonpub. opn.].) In the false PCOR's, appellants misrepresented alleged arms-length sales, failed to disclose that they were married, and falsely claimed that money was paid for the properties.

In order to avoid alerting individuals who were legitimately interested in the properties, appellants would steal mail, divert mail and divert tax statements from the homeowners to themselves. For example, falsely claiming to be the property owner's agent, appellants submitted change-of-address forms to Los Angeles County, requesting that property tax statements be sent to their own post office box. Appellants' strategy was evidenced by a handwritten note: "You do not want to wake up the dog."

If appellants went to the property and found someone living there who was not the titleholder, appellants would fraudulently obtain a quitclaim deed from the victim by claiming it was necessary to clear up an alleged problem or to allow for payment of back taxes. In one case, appellants posed as government agents allegedly there to help the victim. Appellants encouraged people to sign deeds without explanation and without providing copies. When titleholders were living on these properties, appellants would fraudulently induce them to transfer their property in unconscionable transactions for little or no money. For example, appellants fraudulently induced one elderly victim who was behind on her taxes to transfer her home to appellants in a $0 grant deed, falsely representing that it was the only way she could keep her home.

In other cases where appellants found individuals living in the homes, appellants would force them out or bar them from the home. In one case, appellants falsely claimed to be the legal owners of a home and filed an unlawful detainer action to remove a family from the home. The family was not allowed to retrieve family pets. Appellants removed and threw away personal property from the homes, including clothing, furniture, family photos, and personal effects.

After fraudulently obtaining access to the homes, appellants would submit applications for building permits, falsely claiming that they were "owner-builder" and thus allowed to alter the properties. After doing unauthorized work on several properties, appellants rented them to unsuspecting third parties. Appellants conservatively estimated that they were receiving approximately $35,000 each month in rental income from the wrongful scheme.

In some cases, appellants filed quiet title actions to perfect their interest in the properties. To avoid a contested hearing, appellants served most of these actions by publication and deliberately failed to name people with an interest in the property, even when appellants knew who the titleholders or heirs were and where they lived. Appellants falsely represented to the courts that they did not know where the titleholders were, despite having reports from private investigators with title holders' addresses. Appellants falsely told the court that the property was "vacant" and "abandoned" when they took possession, even when they had recently evicted residents.

Through this scheme, appellants were able to claim title to over 100 properties in Southern California, and they became, as they put it, "very rich."

Criminal and civil cases related to appellants' scheme

On October 18, 2006, appellants were arrested following an investigation due to a complaint of elder abuse.

In the first criminal trial against appellants, they were convicted of theft from an elder or dependent adult, two counts of felony trespass of a dwelling, vandalism, and conspiracy. Each appellant was sentenced to three years probation.

In a second criminal trial, appellants were convicted of 19 counts of filing false PCOR's with the Los Angeles County Recorder's Office, five counts of filing false tax returns, and related conspiracy counts. The convictions were affirmed by this court. (People v. Aguayo (June 10, 2010, B212334) 2010 WL 2312293 [nonpub. opn.] (Aguayo I ); People v. Aguayo (May 29, 2013, B236827) 2013 WL 2322892 [nonpub. opn.] (Aguayo II ).) Appellants were sentenced to three years imprisonment. They completed their sentences.

In addition to the two criminal proceedings, the People brought this civil enforcement action under the UCL. The People produced evidence of appellants' prior criminal convictions, but also produced evidence of more than 1,500 additional violations of the UCL, which covers a broader range of conduct than the criminal laws.

The People filed documentary evidence supporting the case-in-chief on September 10, 2013. Beginning on March 4, 2014, the trial court heard live testimony. Twelve witnesses testified for the People. Three witnesses testified for the defense, but appellants presented most of their evidence through the testimony of Jesus Aguayo. The trial court found that Jesus Aguayo's testimony was not credible. It specifically noted:

"Jesus Aguayo was questioned at tremendous
...

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