Opinion
G052789
05-02-2017
SATISH SHETTY, Plaintiff and Appellant, v. THOMAS HENRY BIENERT, JR., Defendant and Respondent.
Satish Shetty, in pro. per., and Paul M. Hittelman for Plaintiff and Appellant. Kaufman Dolowich Voluck, Barry Z. Brodsky and Gretchen S. Carner for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2011-00505443) OPINION Appeal from a judgment of the Superior Court of Orange County, Ronald L. Bauer, Judge. Affirmed. Satish Shetty, in pro. per., and Paul M. Hittelman for Plaintiff and Appellant. Kaufman Dolowich Voluck, Barry Z. Brodsky and Gretchen S. Carner for Defendant and Respondent.
This case has its origins in a species of shenanigans that led to the Great Recession of 2008 - loans to uncreditworthy borrowers made purely for the fees and commissions garnered by loan middlemen. In March 2003, Satish Shetty was indicted in federal court for his role in a scheme to defraud Pan American Bank. Shetty's scam, according to the indictment, was to induce Pan American to make residential loans to straw buyers (buyers who had no intention of actually buying the house or living in it) by cooking up false documents, such as grant deeds, deposit receipts, and settlement statements. Shetty would make money on the scheme by having companies he controlled collect fees, commissions and profits on the funded loans. As federal prosecutors ultimately structured their first superseding indictment in November 2003, Shetty was charged with five counts of federal bank fraud (see 18 U.S.C. § 1344) and four counts of money laundering (see 18 U.S.C. § 1956). He faced 230 years in prison if convicted of all charges.
This is not just rhetoric, as we shall see when we recount Judge Carter's prescient remarks at the plaintiff's sentencing hearing in federal court back in 2004 - about four years before the recession hit.
Shetty took a plea deal in December 2004, which resulted in his imprisonment for a year and three months, plus about $37,000 in restitution, and a special assessment of $200. At the sentencing hearing, Shetty told Judge David O. Carter, "I have done this, and I did it with intention of making money and to make a profit. I do not deny my responsibility in my wrongdoing in giving false - in helping people give false applications to Pan American Bank." Judge Carter noted the broader context of the allegations against Shetty, and, in 2004, correctly prophesied that such activity would lead to a "great recession."
Shetty would not actually serve his sentence until about 2009-2010. (See United States v. Shetty (C.D.Cal. 2014) (Shetty 2014) at p. 2.)
Among Judge Carter's comments: "But it's ultimately the American taxpayer because of the market structure that suffers from this act [referring to the tendency of financial institutions to make bad loans and then re-sell them, all the while pocketing fees]. And if there is a - as long as prices are going up, great, all right. If they ever turn around, people are going to be jumping out the window. [¶] . . . [¶] So two wrongs, two thieves, don't make one good, whole honest person. And, therefore, if the U.S. attorney wants to charge the bank, fine. If it wants to let this go out - if you are correct, underneath their noise - you know, appraisals that are either fraudulent or, quite frankly, in the industry sometimes a wink and a nod to get the appraisal to the right price for the purchaser, then it takes place under the U.S. attorney's nose. They will answer and so will Gennie [sic] Mae, et cetera, when the great recession comes."
In November 2005, in state court, Shetty sued his federal defense lawyer, respondent Thomas Bienert, for legal malpractice. Ironically, Shetty's theory was that Bienert did not actually want to represent Shetty in defending against the federal charges, but simply wanted to collect exorbitant fees by pressuring Shetty into copping a plea. In 2006, with the state malpractice action pending, the Ninth Circuit affirmed Shetty's convictions (United States v. Shetty (9th Cir. 2006) 171 Fed. Appx. 561). The United States Supreme Court declined to take the case. (Shetty v. United States (2006) 549 U.S. 886.)
In 2009 (the state malpractice action was still pending) Judge Carter denied Shetty's request to vacate his sentence. That request was based on the same litany of alleged attorney malfeasance on Bienert's part that makes up the bulk of his appellant's brief in the case before us now, including the point that Pan American Bank is supposedly not a federally insured institution. Judge Carter (patiently) refuted Shetty's laundry list of supposed errors and omissions on Bienert's part in an order dated March 9, 2009 (see United States v. Shetty (C.D.Cal. 2009) (Shetty 2009)) and denied Shetty's motion to vacate his guilty plea because of ineffective assistance of counsel. (Id. at p. 12.)
"Petitioner alleges that counsel was ineffective in various ways, including: (1) failing to attain consent prior to filing of plea; (2) failing to advise Petitioner of meritorious defenses; (3) failing to obtain or utilize a grand jury transcript; (4) failing to prepare for trial; (5) failing to adequately consult with the Petitioner; (6) failing to object to a violation of Federal Rule 11; (7) failing to advise Petitioner about possible immigration consequences; (8) failing to realize that Petitioner was incompetent to plead; (9) failing to inform Petitioner of the nature of the charges against him or the terms of the plea agreement; and (10) failing to notify the Court of a disagreement between counsel and Petitioner. The Court now addresses why each argument fails to show how Petitioner's counsel was ineffective." (Shetty 2009, supra at p. 2].)
California law requires proof of actual innocence in order for a criminal defendant to sue his or her criminal defense attorney for malpractice. "When a former criminal defendant sues for legal malpractice, is actual innocence a necessary element of the cause of action? For reasons of policy and pragmatism, we conclude the answer is yes." (Wiley v. County of San Diego (1998) 19 Cal.4th 532, 534.) It is thus not surprising that in 2010, Bienert obtained a grant of summary judgment in the state malpractice suit Shetty filed in 2005.
So why is the present case - Shetty's second state court malpractice suit against Bienert arising out of his 2004 plea - in this court in the year 2017? Because, in 2011, Judge Carter threw the parties a curve. He sua sponte vacated Shetty's conviction based on the theory that Shetty's plea was involuntary due to coercion by Judge Carter himself. It appears Judge Carter had told Shetty (and we note this was after Shetty had admitted guilt by processing false applications) that if Shetty did not take the 15-month deal, Judge Carter would "max" out his sentence. Judge Carter then vacated Shetty's conviction. Shetty filed this second legal malpractice action in September 2011, less than three months after Judge Carter's order.
The deal had already been finalized, but Judge Carter perceived that Shetty was beginning to waffle on it. He told Bienert: "You talk to your client for just a moment. But if he is convicted, I'm going to max him out, and I'm going to upward depart based on his past conduct. So that's not a threat, that's just reality." Judge Carter then reiterated that the deal was for 15 months.
But the federal story did not end there. It turned out Judge Carter had been overly conscientious in his concern about his max out remark. The United States appealed Judge Carter's 2011 order vacating Shetty's conviction, and in October 2013, the Ninth Circuit reversed Judge Carter's order and reinstated Judge Carter's earlier 2009 order denying Shetty's request to vacate his sentence. (United States v. Shetty (9th Cir. 2013) 543 Fed.Appx. 675 (Shetty 2013).) In his briefs, Shetty fails to acknowledge that his conviction has been reinstated.
The court determined the max out statement was harmless. It said: "Shetty pled guilty pursuant to a detailed plea agreement, which was accepted by the district court after a hearing where the court carefully complied with the rules. See Fed.R.Crim.P. 11. Comments or events after a plea has been voluntarily entered, as it was here, do not suffice to render the plea involuntary or give cause for rescission. In short, while the district court's comment was unfortunate, it did not release Shetty from the consequences of his plea agreement more than seven years after its acceptance by the court. Thus, we remand for reentry of the order of March 27, 2009." (Shetty 2013, supra, 543 Fed.Appx. 675, 676, footnotes omitted.) At oral argument, counsel for Shetty erroneously argued the Ninth Circuit's ruling was based solely on jurisdiction, so there had been no final determination of Shetty's guilt. In fact, it was Judge Carter's ruling that was based on jurisdictional questions. The Ninth Circuit reversed that ruling and reinstated the conviction. Its finality is not reasonably questionable.
The most recent installment of this case on the federal side is Shetty 2014, supra, , based on yet another motion for reconsideration in which Shetty tried yet again to undue his 2004 conviction. This time Judge Carter noted he had already addressed most or all of Shetty's arguments in his March 27, 2009 order, including Shetty's contention he had received ineffective assistance of counsel in "numerous ways." (Id. at p. 6.)
In regard to ineffective assistance Judge Carter wrote: "Petitioner does not identify what new evidence, facts, or law have come to light since the Court's order such that reconsideration of the already-adjudicated claims is appropriate under Rule 60(b) and the Local Rules. Petitioner's new claims do not attack the integrity of the habeas proceeding, only the underlying criminal proceeding. Because Petitioner has not sought or received authorization from the court of appeals for the district court under the procedure laid out in §§ 2244(b)(3) and 2255(h), the Court has no jurisdiction to hear the already-adjudicated or new claims, since they constitute a successive § 2255 petition. Accordingly, the Court DENIES Petitioner's motion for reconsideration on ineffective assistance of counsel grounds." (Shetty 2014, supra, p. 7.)
Shetty 2014 is final, and under Shetty 2014, he remains a convicted felon based on two counts of the 2003 bank fraud charges. In the wake of the reinstatement of the conviction, in 2015 Bienert filed a summary judgment in this case. The motion was granted in September 2015, based on Shetty's inability to show actual innocence. This appeal followed.
Shetty fails to acknowledge the Ninth Circuit's reinstatement of his conviction in his briefing. His arguments on the merits of his suit against Bienert can only be characterized as frivolous.
The only argument raised that is not frivolous, namely that the California rule requiring actual innocence has the effect of nullifying the tort of legal malpractice in criminal cases, is unavailing. The simple answer to it is that the California rule requiring actual innocence is the product of our Supreme Court, which rule was amplified by our high court in 2001 in Coscia v. McKenna & Cuneo (2001) 25 Cal.4th 1194 (Coscia). Coscia makes it clear that "postconviction exoneration" is a prerequisite for a legal malpractice claim. (Id. at pp. 1197-1198.) And Shetty has most assuredly not been exonerated in the federal courts. Even the chimerical vacation of his conviction by Judge Carter in 2011 was based on Judge Carter's own gratuitous remark and most assuredly not on any "exoneration" of the basic charges of falsifying papers to precipitate bank loans.
For which he cites Glenn v. Aiken (1991) 409 Mass. 699 and Kaus & Mallen, The Misguiding Hand of Counsel - Reflections on "Criminal Malpractice" (1974) 21 UCLA L.Rev. 1191. --------
That leaves the two procedural points on which Shetty appeals: He claims he did not receive proper notice of Bienert's summary judgment motion. The basis for the argument is that Bienert had the papers messengered to Shetty's address on record on June 17, 2015, where those papers were received by a person named Yogesh Desai. June 17 was 75 days before the scheduled hearing set for August 31, 2015. But Shetty sent Bienert's counsel an email on June 29, 2015, saying he hadn't received the papers, and Bienert's counsel then served the papers again on July 6. The summary judgment hearing was concomitantly put over to September 21. That means Shetty still had at least 75 days of actual notice, from July 6 to September 21, before the hearing. His service argument is thus unmeritorious - he got all the notice the Legislature has required him to have.
Finally, Shetty complains he was denied a continuance of his motion to do more discovery. But no discovery taken of Bienert could show what Shetty must have to thwart Bienert's summary judgment motion: his actual exoneration in the federal courts. The trial judge was thus reasonable in denying the continuance request. The judgment is affirmed. Costs are awarded to respondent Bienert.
BEDSWORTH, ACTING P. J. WE CONCUR: MOORE, J. THOMPSON, J.