Opinion
C080751
09-26-2017
MARCO AMBROSELLI, Plaintiff and Appellant, v. LOUIS J. ANAPOLSKY, as Administrator, etc., Defendant and Respondent.
ORDER MODIFYING OPINION AND DENYING REHEARING AND REQUEST FOR PUBLICATION [NO CHANGE IN JUDGMENT] THE COURT:
It is ordered that the opinion filed September 26, 2017, in the above cause be modified in the following respects:
At the end of the first sentence of the first paragraph of the discussion that reads, "Anapolsky points out this case centers on an unenforceable agreement," insert the following footnote that will be numbered 1:
In his petition for rehearing, Ambroselli contends he is entitled to submit supplemental briefing because he never had an opportunity to brief the issue of whether the alleged agreement is void as violating public policy. We reject the contention because the parties actually addressed the illegality of the alleged agreement in their original briefing. In his respondent's brief, Anapolsky argued that the agreement was illegal on grounds that it was the product of extortion. Ambroselli recognized the gravamen of this argument in his reply brief where he noted that "Anapolsky's main contention is that, because Ambroselli's consideration was to keep confidential Powers' involvement in Powers' prior conviction, the agreement was necessarily void as against public policy, either as based upon extortion or lacking mutual assent." Ambroselli defended the alleged agreement on grounds it is a lawful agreement in the same way as are settlement agreements with confidentiality clauses. As we explain below, we reject Ambroselli's argument on the merits. We also reject Ambroselli's assertion in his petition for rehearing that he did not have the opportunity to brief the issue of whether the agreement is void as violating public policy.
This modification does not change the judgment.
Appellant's petition for rehearing and request for publication are denied. /s/_________
RAYE, Acting P. J. /s/_________
HULL, J. /s/_________
HOCH, J. NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. SCV0033306)
The distant origin of this bizarre case lies in the efforts of Richard Powers to escape prosecution by the Sacramento District Attorney's Office for four counts of felony drunk driving. Fearing convictions would ruin him professionally, Powers sought to make a deal with the district attorney by which he would escape prosecution in exchange for acting as a confidential informant about another, bigger crime. Powers's problem? He did not have a bigger crime to report. Undeterred, Powers made up a story that his friend, Marco Ambroselli, was illegally selling performance-enhancing drugs. When the district attorney deemed the information insufficient to stave off Powers's prosecution, Powers decided to set up Ambroselli to sell a few ounces of cocaine. This ruse worked. The prosecution dropped the charges against Powers, and Ambroselli took the fall by spending several years in prison for the cocaine sale.
Powers eventually came to regret the injustice he had done to his friend Ambroselli, but was unwilling to publically acknowledge his conduct. Powers began making monthly payments to Ambroselli for his silence about Powers's deception relating to the cocaine deal. Ambroselli now alleges Powers promised to create a $2 million trust in exchange for Ambroselli's continued silence. Powers died before creating the promised trust.
This action is brought by Ambroselli against the administrator of Powers's estate, Louis Anapolsky. The trial court granted summary judgment on grounds the undisputed evidence showed Powers feared Ambroselli and Powers never executed the trust documents. On appeal, Ambroselli contends the trial court made various evidentiary and legal errors in granting summary judgment.
We affirm the judgment of dismissal. Even if Ambroselli's contentions had merit, we would decline to enforce the agreement in this case. The agreement's aim is to continue to cover up Powers's subterfuge on the criminal justice system - an aim that violates public policy and therefore cannot be enforced.
BACKGROUND
The Second Amended Complaint
The second amended complaint is Ambroselli's operative complaint. As pertinent to the resolution of this case, the operative complaint alleged the following: In 1989, Powers was facing four felony charges of driving under the influence. (Veh. Code, § 23152.) According to the operative complaint, "At the time, Powers was an up and coming insurance broker in the Sacramento area. Powers knew that these convictions would result in the loss of Powers' insurance license and the end of Powers' career. Powers was desperate and motivated to escape responsibility for his misdeeds." Powers devised a plan.
Powers retained a criminal defense attorney with a reputation for being able to work with the Sacramento County District Attorney's Office "to arrange for individuals to serve as confidential informants in order to reduce or eliminate criminal charges. Powers did serve as a confidential informant. [Ambroselli] was the target of Powers' clandestine work." For his first attempt to entrap Ambroselli, "Powers lied and informed the District Attorney's office that Ambroselli was involved in distributing performance enhancing drugs among athletes in Sacramento. Powers had explained that Ambroselli had requested that Powers help Ambroselli obtain counterfeit prescription labels for steroids." However, the district attorney informed Powers that "such information was insufficient to offset the pending felony convictions against Powers." According to the operative complaint, "That's when Powers set out to entrap Ambroselli for a more serious crime."
Powers's new plan was to entrap Ambroselli for trafficking cocaine. Using another confidential informant, "Powers had Ambroselli acquire several ounces of cocaine for Powers. Ambroselli was to collect the drugs from one informant and to deliver the drugs to Powers as payment for the counterfeit steroid labels. Ambroselli had never been involved in any sort of narcotics trade, but was friends with Powers and went along with the request. When Ambroselli delivered the drugs as requested by Powers' informant, he was arrested. Ambroselli was ignorant of Powers' plan to entrap Ambroselli and believed the arrest was based on good police work." As a consequence of the entrapment, Ambroselli pleaded guilty to the felony charges and served four years in prison.
At some point, Powers admitted his wrongdoing to Ambroselli. To make up for his misdeeds, Powers "verbally promised Ambroselli that he was going to be setting up a trust for Ambroselli in an amount to take care of Ambroselli financially, including educational needs, for life." The operative complaint further alleges, "Powers stated that this trust arrangement and his support would be conditioned upon Ambroselli not ever publicly discussing or disclosing his conduct and actions that had been directed toward Ambroselli and which had resulted in significant benefits to him. Ambroselli agreed not to do so and the oral contract was formed." (Italics added.)
Powers began sending several hundred dollars each month to Ambroselli. When Powers's attorney learned of the payments, the attorney "challenged Powers about the payments, referring to them as 'hush money' and 'extortion,' but Powers reaffirmed time after time that he wanted to provide for Ambroselli," Powers told his attorney that "he never feared Ambroselli and that the payments were neither extortion nor hush money demanded by Ambroselli; providing for Ambroselli was Powers' idea."
Eventually, Powers "informed Ambroselli that Powers presently held and was going to be placing the specific sum of $2,000,000.00 into an irrevocable trust for Ambroselli from which Ambroselli was to receive the monthly interest or other income and upon Powers' death, the trust corpus transfers to Ambroselli or Ambroselli's heirs."
Powers died unexpectedly in 2012 without having executed the promised trust documents.
Ambroselli brought an action against Anapolsky, as administrator of the Powers estate, for declaratory relief, breach of contract, and enforcement of an oral trust.
Summary Judgment and Dismissal
Anapolsky moved for summary judgment on grounds there was no evidence of intent to establish an oral trust, there was no mutual consent to establish an enforceable contract, and the request for declaratory relief was moot.
The trial court granted summary judgment. In granting summary judgment, the trial court found that "[t]he undisputed facts, based upon the lack of admissible evidence, establish [Powers] feared [Ambroselli]; [Powers] died before executing any formal trust documents, establishing a formal trust, or evidencing any intention of establishing a trust . . . ; and [Powers] never transferred any portion of his property in favor of plaintiff."
From the ensuing judgment of dismissal, Ambroselli timely filed a notice of appeal.
DISCUSSION
Anapolsky points out this case centers on an unenforceable agreement. We set the matter for oral argument and indicated the parties should address the issue of whether the alleged agreement violates public policy. Having considered the parties' arguments on this issue, we conclude the alleged agreement is unenforceable as a matter of law.
A.
Agreements that Violate Public Policy
The illegality of a contract can be raised by any party, or even the court on its own motion. "[T]he court has both the power and duty to ascertain the true facts in order that it may not unwittingly lend its assistance to the consummation or encouragement of what public policy forbids. [Citations.] It is immaterial that the parties, whether by inadvertence or consent, even at the trial do not raise the issue. The court may do so of its own motion when the testimony produces evidence of illegality. [Citation.] It is not too late to raise the issue . . . even on appeal.' " (Fellom v. Adams (1969) 274 Cal.App.2d 855, 863, quoting Estate of Prieto (1966) 243 Cal.App.2d 79, 85-86.)
Civil Code section 1608 provides that "[i]f any part of a single consideration for one or more objects, or of several considerations for a single object, is unlawful, the entire contract is void." (Italics added.) Civil Code section 1667 broadly defines "unlawful" to include terms "1. Contrary to an express provision of law; [¶] 2. Contrary to the policy of express law, though not expressly prohibited; or, [¶] 3. Otherwise contrary to good morals."
As one court explained, " 'The question whether a contract violates public policy necessarily involves a degree of subjectivity. Therefore, '. . . courts have been cautious in blithely applying public policy reasons to nullify otherwise enforceable contracts.' " (Bovard v. American Horse Enterprises, Inc. (1988) 201 Cal.App.3d 832, 838-839, quoting Moran v. Harris (1982) 131 Cal.App.3d 913, 919-920.) Nonetheless, it is well established that " '[a]greements to suppress evidence have long been held void as against public policy, both in California and in most common law jurisdictions.' " (Smith v. Superior Court (1996) 41 Cal.App.4th 1014, 1025, quoting Williamson v. Superior Court (1978) 21 Cal.3d 829, 836-837.)
An instructive case on this point is Brown v. Freese (1938) 28 Cal.App.2d 608 (Brown). In that case, Elizabeth Brown filed an action against the executor of the estate of Mary E. Whitney in order to enforce an agreement between Brown and Whitney. (Id. at pp. 608, 610, 614.) Under the agreement, Brown promised to refrain from disclosing information she discovered about transactions in which Whitney's previously deceased husband had participated. (Id. at p. 617.) Whitney told Brown that " 'there would not be a cent left in the Whitney estate if the stockholders got hold of' " the information about the previous dealings by Whitney's husband. (Ibid.) Additional evidence revealed it was "quite apparent that [Whitney] was under the impression that the so-called 'strictly confidential' information acquired by [Brown] would or might reflect upon the honesty and integrity of her deceased husband, and to protect his memory she was willing to 'put the price' therefor." (Id. at pp. 617-618.) In return for Brown's silence, Whitney paid Brown $100 per month during Whitney's lifetime and also promised to not revoke a will under which Brown stood to inherit real property. (Id. at p. 614-615.) But Whitney revoked her will and disinherited Brown. (Id. at p. 613.) Brown sued Whitney's executor for specific performance of her agreement with Whitney, and the trial court denied relief. (Id. at pp. 610, 614.)
The Brown court affirmed and did not enforce the agreement because the offer to pay for nondisclosure was illegal. (28 Cal.App.2d at p. 618.) The Brown court explained, " 'In many cases falling within the rule stated in the section the bargain is illegal whether or not the threats go so far as to bring the case within the definition of duress. In some cases, moreover, disclosure may be proper or even a duty, and the offer to pay for nondisclosure may be voluntarily made. Nevertheless the bargain is illegal. Moreover, even though the offer to pay for nondisclosure is voluntarily made and though there is no duty to make disclosure or propriety in doing so, a bargain to pay for nondisclosure is illegal.' " (Ibid., quoting Restatement of the Law of Contracts, § 557.) For these reasons, " '[a] bargain that has for its consideration the nondisclosure of discreditable facts, or facts that the promisee is under a fiduciary duty not to disclose, is illegal.' " (Brown, supra, at p. 618, quoting Restatement of the Law of Contracts, § 557.)
B.
The Purported Agreement to Fund the Trust Violated Public Policy
The purported agreement by Powers to create a $2 million trust for Ambroselli is unenforceable as violating public policy. Surprisingly, Ambroselli's own pleading in his operative complaint establishes the unlawful aims of the trust. The purchased silence of Ambroselli would allow Powers both to continue to enjoy the benefit of a scam that allowed him to escape criminal liability for the drunk driving charges and to permanently cover up a scam that resulted in a manufactured crime.
This court will not countenance an agreement intended to allow Powers to continue to benefit from his subterfuge on the criminal justice system. Thus, we invalidate the agreement regardless of whether Ambroselli can introduce evidence of breach of contract or an oral agreement to create a trust. In reaching this conclusion, we do not need to determine the exact scope of "discreditable facts" for which an agreement to remain silent violates public policy. (See Brown, supra, 28 Cal.App.2d at p. 618.) Instead, we determine only that an agreement that purchases silence about conduct that undermines the integrity of the criminal justice system is void.
We recognize Ambroselli is both a participant in the agreement to keep silent about Powers's conduct and a victim of Powers's actions. However, even as a victim of Powers's scam, Ambroselli cannot rely on the courts to fulfill the terms of his agreement with Powers. It is well settled that "a party to an illegal contract cannot come into a court of law and ask to have his [or her] illegal objects carried out.' " ' (Wong v. Tenneco, Inc. (1985) 39 Cal.3d 126, 135.) In a case like the one before us, the law will leave the parties as it finds them." (Yoo v. Jho (2007) 147 Cal.App.4th 1249, 1251.)
We reject Ambroselli's argument the trust is nonetheless enforceable because "the agreement is, in essence, a confidentiality agreement" akin to lawful settlement agreements. Although settlement agreements are generally lawful even when they contain confidentiality clauses, a confidentiality clause may not be used to an unlawful end. "[A] confidentiality contract that is not otherwise objectionable, and that supports some public policy, will be enforced." (Tower Acton Holdings v. Los Angeles County Waterworks Dist. No. 37 (2002) 105 Cal.App.4th 590, 601, italics added.) Here, however, the aim of the agreement violates public policy by perpetuating Powers's deceit relating to the criminal justice system.
DISPOSITION
The judgment of dismissal is affirmed. Louis J. Anapolsky, as administrator, shall recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
/s/_________
HOCH, J. We concur: /s/_________
RAYE, P. J. /s/_________
HULL, J.