Rubinstein v. Fakheri
| Decision Date | 29 May 2020 |
| Docket Number | B291116 |
| Citation | 49 Cal.App.5th 797,263 Cal.Rptr.3d 344 |
| Parties | Arturo RUBINSTEIN, Plaintiff and Respondent, v. Paris P. FAKHERI, Defendant and Appellant. |
| Court | California Court of Appeals Court of Appeals |
Lebedev, Michael & Helmi, Gennady L. Lebedev, Los Angeles, Sam Helmi, Studio City, and Genevieve Bourret-Roy for Defendant and Appellant.
Tesser | Grossman, Brian M. Grossman and Frank R. Trechsel, Los Angeles, for Plaintiff and Respondent.
Paris P. Fakheri appeals from a judgment against him following a court trial. We affirm.
The trial court found that respondent Arturo Rubinstein loaned Fakheri $874,708.44, which Fakheri never repaid. Fakheri does not dispute that he received the money, but he argues that it came from entities controlled by Rubinstein rather than from Rubinstein himself. Although those entities assigned their interests in the loan to Rubinstein, the entities’ corporate powers were suspended at the time of the assignments. Fakheri therefore claims that Rubinstein did not have "standing" to sue.
The trial court found that Fakheri waived this defense because he did not raise it until trial. That finding was within the court's discretion. Rubinstein stood in his entities’ shoes with respect to the rights he could exercise by assignment. But the issue is one of capacity to sue, rather than standing or jurisdiction. The defense of lack of capacity is waived if not asserted at the earliest opportunity. Fakheri failed to do so here.
Fakheri also argues that the trial court erred in finding for Rubinstein on his common count claim for money lent because Fakheri did not personally request the loan. Rather, Rubinstein provided the money to Fakheri at the request of a mutual business associate of his and Fakheri's, Yoram Yehuda.
We reject the argument. The trial court properly concluded that proof of an implied promise to repay was legally sufficient for Rubinstein's common count claim. The trial court's finding that Fakheri made such an implied promise is based on substantial evidence. That evidence included Yehuda's request that Rubinstein loan the money to Fakheri; Fakheri's receipt of the money directly from Rubinstein after providing wiring instructions to Yehuda; and the lack of any other reasonable explanation for the transfer.
Rubinstein and Yehuda were friends and business associates. Yehuda is a contractor. The two had invested together in various real estate projects.
Rubinstein had heard of Fakheri through Yehuda from a prior real estate transaction, but Rubinstein had not met him. In November 2013, Yehuda asked Rubinstein to lend money to Fakheri so that Fakheri could purchase a house from Yehuda. The house was on Boris Drive in Encino (the Boris Property). The arrangement that Rubinstein and Yehuda discussed was that the money would be repaid, without interest, once Yehuda had renovated the Boris Property and it had been sold. Rubinstein agreed to the loan because of his close relationship with Yehuda at the time.
Rubinstein provided the money to Fakheri through wire transfers and checks from various sources. Fakheri provided his account information for the wire transfers to Yehuda, who gave that information to Rubinstein.
One payment of $383,532.28 was wired to Fakheri from "Rick O'Hara & Associates" (O'Hara). A company that Rubinstein owned, Lanark MK LLC (Lanark), borrowed that money from O'Hara to provide to Fakheri. Yehuda told Rubinstein that Fakheri would make the payments to O'Hara on the loan. Fakheri made one $100,000 payment. However, Rubinstein repaid the rest of the amount due on the loan himself after he and Yehuda had a falling out.
Another large payment of $471,863 was wired to Fakheri from an account belonging to another entity that Rubinstein owned, 19111 Wells Dr., LLC.2 Fakheri received the remainder of the money for the loan in the form of checks from Wells made out to him and signed by Rubinstein.
Fakheri purchased the Boris Property and Yehuda renovated it. Fakheri sold the property in December 2014. After the sale, Fakheri paid approximately $1.3 million to Yehuda.
Fakheri testified that he believed the money he received from O'Hara to purchase the Boris Property was a loan that Yehuda had arranged and that Fakheri was obligated to repay to Yehuda. Fakheri further testified that the $471,863 he received from Wells was the repayment of a loan that Fakheri had previously made to Yehuda.
Other than the $100,000 that Fakheri repaid on the loan from O'Hara, Fakheri did not repay anything to Rubinstein.
Rubinstein filed his complaint (Complaint) in this case against Fakheri on August 9, 2016. The Complaint alleged one common count claim for "money lent."
Fakheri filed a general denial. The general denial asserted the statute of limitations as an affirmative defense but not standing or the lack of capacity to sue.
The parties tried Rubinstein's common count claim to the court on March 7 and 8, 2018. At trial, Rubinstein introduced evidence that Lanark and Wells had assigned their claims against Fakheri to Rubinstein.
Just before the conclusion of trial, Fakheri filed a request for judicial notice of a document from the California Secretary of State showing that the corporate powers of Lanark and Wells were suspended. The trial court kept the defense case open pending receipt of a certified copy of the document, which Fakheri submitted several days later.
In his written closing argument, Fakheri claimed that Rubinstein lacked "standing" to sue. Fakheri argued that the money Fakheri received for the Boris Property transaction came from Wells and Lanark, not Rubinstein, and that Rubinstein's claim therefore belonged to those entities. Fakheri argued that, as an assignee of the corporate claims, Rubinstein was subject to the same defenses as the corporate assignors. Fakheri claimed that the corporate powers of Lanark and Wells, including the right to file a lawsuit, were suspended at the time they assigned their claims to Rubinstein, and that Rubinstein therefore also did not have the right to sue.
On May 14, 2018, Rubinstein filed a request for judicial notice of documents from the Secretary of State showing that, as of April 25, 2018, both Lanark and Wells were again active and in good standing.
On June 20, 2018, the trial court issued a written "Verdict Following Court Trial."3 The court first granted the requests for judicial notice of both Fakheri and Rubinstein. The court overruled Fakheri's objection to the reopening of evidence for the purpose of receiving Rubinstein's documents from the Secretary of State, observing that Fakheri's " ‘standing’ defense involving the capacity of [Wells and Lanark] to assign their claims to Rubinstein was not raised until trial."
The trial court denied Fakheri's standing argument on the same ground. The court explained that "[s]tanding does not appear among the 36 mainly-boilerplate affirmative defenses in the Answer, so it is waived." The court also found that "Rubinstein in fact provided the loan money and his companies were merely accounts he used to draw money from in the transactions, so Rubinstein may properly recover personally."
On the merits, the trial court found that Rubinstein provided the $874,708.44 to Fakheri as a loan. The court also found that the evidence showed an implied promise by Fakheri to repay the loan. The court reasoned that "[i]n the basic situation of an intermediary-arranged loan at issue here, the lendee will be unjustly enriched (and the lender unjustly deprived of repayment) if the Court does not enforce an implied promise to repay." The court concluded that such an implied promise was all that was necessary to prove a common count claim for money lent.
The court indirectly addressed Fakheri's defense that he thought the money came from Yehuda. The trial court explained that an implied promise to repay might be inequitable if an intermediary (such as Yehuda) communicated different loan terms to the lender and to the recipient of the loan. However, the court stated that it was "not convinced there is any inequity in ordering repayment from Fakheri." The court also concluded that, "to the extent there might be" such inequity, it was mooted by Fakheri's testimony that Yehuda had agreed to indemnify him.
The trial court found that Rubinstein had conceded "that $100,000 of the $874,708.44 transferred as a loan was repaid." The trial court therefore awarded $774,708.44 to Rubinstein along with prejudgment interest, for a total judgment of $874,550.32.
Fakheri claims that the trial court erred in finding that he forfeited his defense concerning the suspension of Wells's and Lanark's corporate powers. He argues that the defense concerns Rubinstein's standing to sue, which may be asserted at any time.
We independently review Fakheri's legal argument that his defense raised an issue of standing that could not be forfeited. (See Robbins v. Foothill Nissan (1994) 22 Cal.App.4th 1769, 1774, 28 Cal.Rptr.2d 190 ( Robbins ) [].) We review for abuse of discretion the trial court's ruling that Fakheri did not timely raise the defense. ( Cal-Western Business Services, Inc. v. Corning Capital Group (2013) 221 Cal.App.4th 304, 312, 163 Cal.Rptr.3d 911 ( Cal-Western ).)
Fakheri's argument that Rubinstein lacked standing to sue is wrong. Even assuming that the claim Rubinstein asserted belonged to Wells and Lanark rather than to Rubinstein personally, he acquired the right to sue by virtue of the entities’ assignments of their claims.4
It is immaterial that the corporate powers of Lanark and Wells were suspended at the time they made the assignments. A contract made by a suspended corporation is not void, but is only voidable "at the instance of any party to the contract other than the taxpayer." ( Rev. & Tax. Code, § 23304.1,...
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