Strathvale Holdings, Ltd. v. Silbert

• Decision Date: 15 July 2003
• Docket Number: B155493.
• Court: California Court of Appeals Court of Appeals
• Parties: STRATHVALE HOLDINGS, LTD., et al., Plaintiffs and Respondents, v. HUGH SILBERT et al., Defendants and Appellants.

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STRATHVALE HOLDINGS, LTD., et al., Plaintiffs and Respondents, v. HUGH SILBERT et al., Defendants and Appellants.

B155493.

Court of Appeals of California, Second Appellate District, Division Two.

Filed July 15, 2003.

APPEAL from a judgment of the Superior Court of Los Angeles County No. BC 154006. Emilie H. Elias, Judge.

Affirmed.

Martin E. Jacobs, Inc., and Martin E. Jacobs for Defendants and Appellants.

Law Office of Gary Kurtz and Gary Kurtz for Plaintiffs and Respondents.

DOI TODD, J.

Plaintiffs and respondents Strathvale Holdings, Ltd. (Strathvale) and Concord Investment Holdings Corporation (Concord)¹ sought recovery for damages alleged to have arisen out of certain investments made by respondents in an allegedly fraudulent financial investment scheme. The case proceeded to a bench trial on respondents' claims for unfair business practices under Business and Professions Code² section 17200, constructive trust and conversion.³ The court entered judgment in favor of respondents and against defendants and appellants Hugh Silbert and his defunct companies Hu-Mann Co., Inc., Allied Provincial Investments, S.A., Bellingham Industries Ltd., and Zenith Acquisitions and Imperial Holdings, Ltd. We affirm.⁴

FACTUAL AND PROCEDURAL BACKGROUND

Trial

The following evidence was presented at trial: In 1994, respondents invested an aggregate of $ 430,000 into an investment program initially offered by an entity called Manor Financial Services and its principal, Rob Nite.⁵ Specifically, respondent Strathvale invested $ 300,000, and respondent Concord invested $ 130,000. Ken Murishwar, managing director of Concord, was told by a third-party broker that in return for investing between $ 130,000 to $ 150,000 in the Nite program, he would receive $ 1 million a week for a 40-week period.

Respondents' witness, Steven Rambam, a private licensed investigator who was hired by appellant Hugh Silbert in 1994, testified that respondents' investment amounts made their way to third party Nevis International Ltd. and its principals Phil Thomas and David Sims,⁶ and from there to Silbert. Silbert referred to Thomas and Sims as his partners, and several agreements between them were admitted at trial. The invested money was eventually deposited into an escrow account in the name of attorney Charles Mehrman, now deceased (Mehrman escrow).

Once the funds were in the Mehrman escrow, Silbert had access to the money, which he used to fund his prime bank advance fee program. Rambam testified that, in theory, the program was supposed to work as follows: The investment or advance fee made by an investor would be used to secure a bank instrument known as a funding commitment or "standby letter of credit" or "prime bank guarantee." Once the funding commitment was obtained, it would be used to purchase prime bank notes (midterm bank bonds or debentures) at a discount, which could then be sold at market, and the difference between the purchase price and sale price would constitute the investor's profit.

In the present case, Silbert, who admitted he had no professional licenses, directed funds from the Mehrman escrow to purchase fraudulent instruments purportedly issued by two offshore banks, Kansai Bank and Bumi Daya Bank, and the nonexistent Eurobanco. Restitution was made to Silbert on the Eurobanco transaction to the equivalent of approximately $ 500,000 by individuals named Jimmy Bernard Sanchez and Charles Goodwin. However, neither Strathvale nor Concord received a return on their investments or recovered their investments. Silbert admitted that he pocketed some of respondents' investment monies. Rambam testified that Silbert admitted he had never seen a funding commitment that was real, and that none of his funding programs had ever produced any money for investors. Rambam also testified that he had numerous conversations with Silbert about these fraudulent transactions in 1994.

At the end of trial, the court made clear that the tentative decision was to find the transaction "to be totally a scam" and stated "there is no doubt in my mind that this entire transaction and everybody participating in this transaction, everybody offering these — whatever they supposedly are — are engaging in unfair business practice, and it was done in an unlawful — besides being, I don't believe a real deal, it also was done in an unlawful manner because it was done by an unlicensed broker."

Statement of Decision

Following trial, the parties submitted briefs on several issues, including whether Silbert was required to have a broker's license. Appellants also submitted "proposals" as to the content of a statement of decision and respondents submitted two proposed statements of decision. The trial court ultimately issued a statement of decision that did not address the issue of whether Silbert needed a license. In the statement of decision, the court found that: Silbert's prime bank advance fee programs "were scams and fraud schemes"; appellants Silbert and Hu-Mann Co., Inc., Allied Provincial Investments, S.A. and Bellingham Industries Ltd. "engaged in unfair business practices as defined by Business and Professions Code section 17200"; respondents Strathvale and Concord were entitled to a judgment against appellants jointly and severally in the amount of their investments; and a constructive trust would be imposed over certain identified instruments to the extent necessary to satisfy the judgment. The court also found that "Silbert and his testimony lacked credibility and were not to be believed."

Judgment

On June 29, 2001, the court entered judgment against appellants Silbert, Hu-Mann Co., Inc., Allied Provincial Investments, S.A., Bellingham Industries Ltd., as well as Zenith Acquisitions and Imperial Holdings, Ltd., in favor of Strathvale in the amount of $ 300,000 plus interest, and in favor of Concord in the amount of $ 130,000 plus interest. The judgment awarded plaintiff Karifa Capital Corp. Ltd. nothing on its complaint. A constructive trust was also imposed over all interests of respondents in "any money held by Jimmy Bernard Sanchez and all security for those funds" consisting of a security agreement and U.C.C. 1 statement, secured by a Rolls Royce and personal property located in Texas, and a real estate lien notice and deed of trust, secured by a deed of trust on certain real property in Texas.

Appellants filed their notice of appeal on December 24, 2001.

DISCUSSION

A. Untimely Appeal

As an initial matter, respondents assert that appellants' notice of appeal was untimely since it was filed nearly six months after the judgment was entered.

California Rules of Court, rule 2(a), provides that a notice of appeal must be filed on or before the earliest of (1) 60 days after the superior court clerk mails appellant a document entitled "Notice of Entry" of judgment or a file-stamped copy of the judgment, showing the date either was mailed, (2) 60 days after appellant serves or is served with a document entitled "Notice of Entry" of judgment or a file-stamped copy of the judgment, accompanied by a proof of service, or (3) 180 days after entry of judgment.

The parties' counsel have submitted conflicting declarations on this issue.⁷ Appellants' counsel states that he was served by respondents' counsel in court with a copy of the signed judgment that "was not file stamped." He attached this copy of the judgment to his declaration. We note that in addition to the lack of a file-stamp, this copy of the signed judgment also contains blank spaces for the amounts of interest awarded, which amounts appear on a copy of the judgment found elsewhere in the record.

The declaration of respondents' counsel, on the other hand, states that he served appellants' counsel with "a file stamped" copy of the judgment. However, there is no proof of service of such a document, as is required by California Rules of Court, rule 2. Moreover, there is no mention by either counsel of service of a document entitled "Notice of Entry" of judgment, nor does the record contain one.

Accordingly, in the absence of a proof of service showing service of either a file-stamped copy of the judgment or a document entitled "Notice of Entry," we conclude that the notice of appeal, filed within 180 days after entry of judgment, was timely.

B. Substantial Evidence

Appellants argue that "Silbert and his entities did not commit any acts in violation of California Business & Professions Code section 17,200 [sic]." Appellants do not assert that they did not violate section 17200 as a matter of law. What appellants appear to be arguing, in essence, is that there is no substantial evidence to support a finding that appellants engaged in unfair competition.⁸

Standard of Review

Although appellants fail to do so, we will set forth the applicable standard of review. "When a trial court's factual determination is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination, and when two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court. If such substantial evidence be found, it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion." (Bowers v. Bernards (1984) 150 Cal. App. 3d 870, 873-874, 197 Cal. Rptr. 925.) The substantial evidence rule recognizes that appellate courts should defer to a trier of fact's resolution of factual issues because the judge or jury has the benefit of observing the demeanor of witnesses and, therefore, is in a better position to assess credibility. (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28 Cal.App.4th 613, 622-623; Maslow v....