People v. Kaufman, D070902

• Decision Date: 16 November 2017
• Docket Number: D070902
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE, Plaintiff and Respondent, v. Jack H. KAUFMAN, Defendant and Appellant.

17 Cal.App.5th 370

225 Cal.Rptr.3d 334

The PEOPLE, Plaintiff and Respondent,

v.Jack H. KAUFMAN, Defendant and Appellant.

D070902

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

Filed November 16, 2017

John L. Staley, under appointment by the Court of Appeal, for Defendant and Appellant.

Xavier Becerra, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Eric A. Swenson, Lynne McGinnis, and Jennifer B. Truong, Deputy Attorneys General, for Plaintiff and Respondent.

DATO, J.

On what can only be described as an unusual set of facts, a jury convicted Jack Kaufman of grand theft of personal property belonging to his longtime friend Dr. Steven Emmet. ( Pen. Code, § 487, subd. (a).)¹ At trial, the prosecution's theory was that Kaufman: (1) sold Emmet a promissory note on property owned by Aaron Reinicke; (2) renegotiated the note with Reinicke and reconveyed the property to him free and clear without telling him that Emmet owned the note or informing Emmet of the transaction; and (3) deprived Emmet of Reinicke's final payment of around $36,000 on the note. The prosecution claimed the evidence supported conviction for grand theft by larceny, and the jury was instructed on only that theory of theft.

On appeal Kaufman claims that to the extent any crime occurred, it was theft by false pretenses as to Reinicke , not larceny as to Emmet. Accordingly, he maintains, the trial court instructed the jury on the wrong offense allegedly committed against the wrong victim. As he did at trial, he also argues there was no theft because Emmet exercised his right of recourse, allowing Kaufman to renegotiate the note with Reinicke. Kaufman contends that Emmet's alleged attempt to extort repayment from Kaufman was a defense to the crime of larceny, and he asserts the trial court prejudicially erred when it refused to admit relevant evidence or instruct the jury on that defense. The People oppose each of these contentions, but argue the court committed sentencing error in ordering summary probation.

We affirm. Viewing these unusual facts in the light most favorable to the verdict, we conclude substantial evidence supports Kaufman's conviction for grand theft by larceny, and the trial court properly instructed the jury on that offense. We find no basis to conclude that a victim's attempted extortion of the defendant presents a valid defense to a charge of theft by larceny. Even if it were a valid defense, the evidence Kaufman sought to introduce came in at trial and did not present substantial evidence of extortion to warrant a jury instruction. Finally, we reject the People's claim of sentencing error and conclude that by ordering summary probation, the trial court classified Kaufman's offense as a misdemeanor by operation of law.

FACTUAL AND PROCEDURAL BACKGROUND

In January 2002 Kaufman sold an office property to Reinicke, taking back a $55,000 promissory note secured by a second trust deed. Reinicke was to repay the note at seven percent interest over 10 years, in monthly installments of around $365 credited toward both interest and principal, with a balloon payment at the end of the 10-year period. The note permitted Reinicke to repay the note early in full or in part at any time before maturity without penalty.

Kaufman and Emmet had a 25-year personal and professional relationship. In November 2002 Kaufman proposed that Emmet buy the Reinicke note as an investment vehicle for his pension plan. On December 2, 2002, Kaufman sent Emmet a letter offering to sell the note at a discounted rate of $45,000, and stating that Kaufman "personally guarantee[d] [for] the full performance of the maker of the note as to the $45,000 paid for the discounted note."

Emmet said he understood this language to mean that Kaufman personally guaranteed repayment of not only the $45,000 principal, but also the investmentas a whole. At trial Kaufman claimed he had only offered Emmet a right of "recourse," with Kaufman guaranteeing repayment of only the $45,000 principal. In total, Emmet expected to receive around $80,000 at the end of 10 years, making it an attractive investment.

Emmet bought the note from Kaufman for $45,000 and recorded an assignment of deed of trust at the San Diego County Recorder's Office. Kaufman instructed Reinicke in writing to direct payments to Emmet, but he never told him he had sold the note to Emmet.² Emmet received monthly checks directly from Reinicke, but at times Reinicke missed payments and Kaufman would send Emmet a check directly.

In December 2010 with a $40,000 balance remaining on the note, Reinicke approached Kaufman to renegotiate the terms. Kaufman offered a 10 percent discount if he repaid the balance in full by the end of the month, and Reinicke accepted. Reinicke thought Kaufman still owned the note when he gave him two cashier's checks totaling $36,732. On December 23, 2010, Kaufman executed a "Substitution of Trustee and Full Reconveyance" representing that he was the "legal owner and holder" of the Reinicke promissory note. Reinicke recorded the reconveyance at the San Diego County Recorder's Office on March 4, 2011.

Shortly after the reconveyance, on January 2, 2011, Kaufman sent Emmet an email stating, "Reinicke is having financial difficulties and I have decided to bite the bullet—I am going to be making payments to you under my guarantee to you.... [¶] I need to pick up the original note and trust deed asap so I can put maximum pressure on Reinicke." Emmet replied, "[W]e appreciate your putting the pressure on him ... and we're happy to make you a copy of the note...." He never gave Kaufman the original note. From that point forward, Kaufman made occasional payments of around $365 to Emmet. Emmet received one payment in January 2011, another seven months later, and another four months after that; Kaufman never made up payments for the months missed.

Kaufman testified at trial that Emmet exercised his right of recourse in December 2010 before Reinicke asked for an early payoff discount. He claimed he had asked Emmet to give him a copy of the note and trust deed in January 2011 in order to put pressure on Reinicke in an unrelated transaction. However, Emmet testified he never agreed to assign the note to Kaufman and always believed the note remained in his name.

In July 2012 Emmet emailed Kaufman, "i think reinicke is about 6 months behind ... what will it take to bring him up to date ... and keep him there?" Kaufman replied that Reinicke was "gradually making up the delinquencies" and suggested "it makes good sense to work with him." In September 2012 Emmet asked Kaufman, "is he ever going to pay this? as you advised me what a great deal this is ... how do we get out of this or bring him up to date?" Kaufman replied he would pick up a check from Reinicke personally and deliver it to Emmet. Two months later Emmet emailed again about Reinicke's missed payments, and Kaufman wrote, "Will meet with him myself in January [2013] and get a specific plan to bring account current and stay current first certain." In December Emmet wrote to Kaufman that Reinicke was "about a year behind" and asked when he would make up missed payments. Kaufman replied, "I will see as I have told you that reinke [sic ] will pay—i am guaranteeing it as you know." Emmet pressed Kaufman that the note was due in full many months ago, in February 2012. Kaufman replied that Reinicke needed more time to pay it off and stated an extension was part of the original deal. Emmet responded that he had no documentation of having authorized an extension on the note.

At some point Emmet called Reinicke himself about the missed payments. Reinicke told Emmet he had repaid the note in full in 2010. Emmet was shocked because he had never given Kaufman authority to negotiate early repayment and continued to believe he owned the note. Nevertheless, Emmet trusted Kaufman and did not know Reinicke; he initially assumed what Reinicke had told him was not true.

When Emmet inquired of Kaufman in early January 2013, Kaufman told him that the deed Reinicke paid off was not the trust deed attached to the note Emmet had purchased. Kaufman also agreed to pay Emmet the remaining $38,000 on the Reinicke note, plus missed payments, pursuant to his personal guarantee. On January 22, 2013, Kaufman sent Emmet an email stating,

"Reinke [sic ] in light of his discussion with you is thinking that he has some leverage or advantage to get more favorable terms than I had originally offered him back when—so I have decided in light of my promise to you from day one that the payment is guaranteed by me personally and with full recourse—to do the following.

"1. I am sending today the $368 or so check due for this month;

"2. I am going to pay each following month $368 or more against the note and arrearages [ ... ];

"3. I am going to Pay the full balance due your plan plus the arrearages no later than July 31, 2013;4. At the time of payoff—your plan is to assign back to me the note and security and I will pursue the matter with Reinke [sic ] at that time.

"The end result will be that your [pension] plan will have received exactly what was promised."

Emmet understood this language to mean that Kaufman would pay off the full balance of outstanding principal and interest due on the note by July 31, 2013.

Kaufman did not send the funds, and in August 2013, Emmet pressed him to pay the $55,000 face value of the note, minus whatever principal had been paid over the years. Emmet wrote, "as you have seen from the documents i sent you the second trust deed was repaid completely by reineke [sic ] LAST YEAR ... and you did not mention this or forward that money to me. exactly how much did mr. reineke pay you?" After a heated exchange between the parties as to the amount of principal remaining on the Reinicke note, Kaufman agreed to pay Emmet $45,000 to settle the matter.

In late August Kaufman sent Emmet a check for $45,852, but it did not clear...