Opinion
B228020
12-23-2011
FEDERATED CAPITAL SERVICES, Plaintiff and Respondent, v. SUSANNA BERBERYAN, Defendant; LEVON POSTACHIAN, Third Party Claimant and Appellant.
Robert A. Miller for Third Party Claimant and Appellant. Winn Law Group, John E. Gordon, and Roger McCaffrey for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. EC032187)
APPEAL from a judgment of the Superior Court of Los Angeles County, Donna Fields Goldstein, Judge. Affirmed.
Robert A. Miller for Third Party Claimant and Appellant.
Winn Law Group, John E. Gordon, and Roger McCaffrey for Plaintiff and Respondent.
INTRODUCTION
Levon Postachian appeals from a judgment denying his third party claim of exemption by which he asserted superior entitlement to money held in a bank account in the name of Susanna Berberyan (a judgment debtor), which funds were levied upon by plaintiff and respondent (the judgment creditor), Federated Capital Services ("Federated"). We conclude the trial court had before it substantial evidence to support its conclusion that Postachian failed to prove that the funds in Berberyan's bank account were held in trust by her for Postachian's benefit. Accordingly, we affirm the judgment in favor of Federated.
FACTUAL AND PROCEDURAL BACKGROUND
I. Events Giving Rise to the Present Third Party Claim of Exemption
Federated held an unsatisfied judgment against Susanna Berberyan and her former husband for $91,187.37. On December 4, 2009, Federated procured a writ of execution in the amount of $106,919.26. The Los Angeles County Sheriff's Department levied the writ of execution upon the balance in Berberyan's personal account at the Lockheed Federal Credit Union (Lockheed) on December 24, 2009. Accordingly, Lockheed delivered possession of those funds to the Sheriff's Department.
Postachian, for whom Berberyan provided bookkeeping services, asserted that of the $63,846.45 on deposit in Berberyan's Lockheed account, $63,200 belonged to him and was not subject to being levied upon by Federated. Postachian therefore initiated this third party claim of exemption (pursuant to Code Civ. Proc., § 720.010, subd. (b)) on February 2, 2010.
Code of Civil Procedure section 720.110 provides: "A third person claiming ownership or the right to possession of property may make a third-party claim under this chapter in any of the following cases if the interest claimed is superior to the creditor's lien on the property: . . . [¶] (b) Where personal property has been levied upon under a writ of attachment, a writ of execution, a prejudgment or postjudgment writ of possession, or a writ of sale."
Federated deposed Postachian in April 2010. The trial court ordered sealed all information relating to Postachian's disclosures of confidential financial matters. Postachian filed an initial brief in June 2010. Federated filed a brief in opposition in which it pointed out that Postachian was not a signatory on the Lockheed account and Lockheed had not been given notice of the existence of a trust with regard to the account. Postachian filed a reply.
II. The Declarations
Postachian filed supporting declarations (signed by Postachian and Berberyan) and various financial documents, purportedly tracing the movement of cash from his personal accounts into Berberyan's Lockheed account. In their declarations, Postachian and Berberyan indicated that most of the money in Berberyan's Lockheed account belonged to Postachian, and Berberyan was simply holding the money in trust for him.
Postachian explained in his declaration that he frequently engaged in personal business transactions (separate from his corporate business activities) which, for example, required the use of "'working capital'" to enable him to purchase, in cash, electronic components which he then resold in overseas markets. "My personal goal is to be well-positioned to step into such entirely lawful profit-making opportunities, and that necessarily requires that I attempt to have readily available on short notice substantial amounts of cash for speedily arranging and closing those profitable transactions as they arise. In so holding such monies for virtually immediate use as needed, I also seek to 'balance' my deposited personal funds, by assuring that they are distributed so as to diversify such funds against risk of loss, which I do by causing them to be deposited in federally-insured accounts in multiple financial institutions so as to protect them against possible loss in the event of bank seizure, bank failure, runs on a particular institution, or otherwise. In mid-2008 the possibility of such losses was of special concern to me, particularly with the events surrounding the unanticipated take over [sic] of Indy Mac Bank in Pasadena by the federal regulators, problems in the capital, stock and real estate markets, and similar unsettling economic developments that were then beginning to play out." He therefore deposited his money into multiple accounts in federally insured financial institutions both in his name and in the names of trusted friends, relatives, or associates. When he deposited money in other peoples' accounts, he did so with the understanding that the funds were being held in trust for him, for safekeeping only, pending his demand for immediate return. He made clear that no gift of funds was being made, and that he remained the owner of such funds. Berberyan, who provided bookkeeping and other financial services for Postachian's corporations, was one of the people he asked to deposit money in her federally insured account for "safekeeping."
Berberyan stated in her declaration as follows: "[V]irtually all of the moneys on deposit in the Lockheed account as of December 24, 2009 were funds owned by Mr. Postachian, not me, although I had deposited them into that account at Mr. Postachian's request. He had asked me to accept such monies for safekeeping, and deposit them in my account, as part of his customary practice of 'balancing' his personal money holdings through various federally insured accounts in banks and other financial institutions, and I did so solely for that purpose (and not for any illegal or unlawful purpose or for tax evasion purposes — all income taxes due on interest earned on such deposits ha[ve] and will be paid). I always understood and agreed that Mr. Postachian's said personal funds were entrusted to me to be held in trust for him, for safekeeping only, by depositing them into my existing account maintained in my name at a federally insured institution, and were to be redelivered to him immediately upon his making any demand that I so redeliver his money to him. All such funds were delivered to me under a clear and express understanding that Mr. Postachian was not making any gift of funds to me, that he was the owner of such funds at all times and would always so remain, and that all monies were to be redelivered to him immediately upon any demand for their return he might make. I always understood that he would be the one responsible for payment of income tax on any interest paid on such deposited funds regardless of the name of the accountholder as stated on the books of the bank or other financial institution where the account was opened and maintained, and that is how we have always dealt with such matters."
Berberyan further declared that, starting in August 2008, Postachian would withdraw his personal funds from his bank account in cash (or use cash he had on hand) and entrust the cash to Berberyan to deposit into her Lockheed account, where the funds were to remain on deposit until Postachian requested that she redeliver the funds to him. However, he did not request redelivery of any funds he gave to her from August 2008 until the Lockheed account was levied upon in late December 2009. Berberyan made a total of 16 cash deposits of Postachian's funds. With Postachian's consent, beginning in February 2009, Berberyan used some of the funds entrusted to her by Postachian for her personal expenses (eventually using as much as $29,500), although she replenished his funds by September 2009.
III. The Hearing and the Judgment
At the outset of the hearing, the court stated that it had reviewed the bank records provided in support of Postachian's claim. The court expressed its doubt that the agreement between Postachian and Berberyan was entered into for lawful purposes, saying that "[t]o believe [the funds] to be an after tax fund belies credulity." The court noted that the "main problem" with Postachian's position was that "whether or not he loaned or gave her funds, he has nothing to demonstrate a superior right to these funds." The court continued: "There's money in a bank account, and it's in her name. She has legal title. She has the legal right to these funds. It's not in a joint name. It's in her name. She's not holding it in trust. She has the legal title to a bank account. She has — there's no paperwork. There's nothing that shows these are held in trust for anyone. He gave her money. She deposited it." (Italics added.) The court concluded that the account was in Berberyan's name, "not in trust for [Postachian], and I think [Federated] ha[s] a superior claim to it." The court found that Postachian was neither a trustor nor a trustee, and that no trust was created. Particularly in the context present here, involving a creditor's attachment of a bank account, the court plainly viewed the declarations of Berberyan and Postachian as insufficient to establish the existence of an express oral trust.
On September 8, 2010, the trial court entered judgment denying Postachian's third party claim of exemption.
DISCUSSION
Postachian contends on appeal, as he did in the trial court, that an express oral trust existed, whereby he entrusted his money to Berberyan to deposit into her Lockheed account, where the funds were to remain on deposit until Postachian requested that she redeliver the funds to him. He did so with the understanding that the funds were being held in trust for him, for safekeeping only, pending his demand for immediate return. He made clear that no gift of the funds was being made, and that he remained at all times the owner of such funds.
A trust is created only if the following requirements are met: (1) the settlor properly manifests an intention to create a trust (Prob. Code, § 15201); (2) there is trust property (Prob. Code, § 15202); (3) the purpose of the trust is not illegal or against public policy (Prob. Code, § 15203); and (4) except in the case of a charitable trust, there is a beneficiary (Prob. Code, § 15205, subd. (a)).
The existence and terms of an oral trust of personal property may be established only by clear and convincing evidence. (Prob. Code, § 15207, subd. (a).) The oral declaration of the settlor, standing alone, is not sufficient evidence of the creation of a trust of personalty. (Prob. Code, § 15207, subd. (b).) Also relevant here is Evidence Code section 662, which provides that "The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof." Finally, Code of Civil Procedure section 720.360 provides that "At a hearing on a third-party claim, the third person has the burden of proof."
"It is often said that the evidence to prove an oral trust of personalty must be clear and convincing . . . . [Citations.] However, the application of this test is primarily for the trial court (Hansen v. Bear Film Co., Inc. [(1946) 28 Cal.2d 154,] 173; Beeler v. American Trust Co. [(1944)] 24 Cal.2d 1, 7) whose determination cannot be attacked on appeal if there is substantial evidence to support the judgment. [Citation.] The required proof may be indirect, consisting of acts, conduct and circumstances (Hansen v. Bear Film Co., Inc., supra, at p. 173) . . . ." (Fahrney v. Wilson (1960) 180 Cal.App.2d 694, 697-698.)
Our sole task is therefore to determine whether the trial court had before it substantial evidence to support the judgment in favor of Federated, based on the court's finding that Postachian failed to sustain his burden of proving by clear and convincing evidence that a trust existed. We readily conclude that the judgment is supported by substantial evidence. The only evidence of the existence of a trust came from the declarations of Postachian and Berberyan, both of whom stood to gain by asserting the existence of a trust. Their conduct, however, to which both admitted in their respective declarations, belied the existence of a trust. The purported objective of the trust—for Berberyan to hold the money for safekeeping and relinquish it to Postachian for his immediate needs—never occurred. Not once from August 2008 through December 2009 did Postachian request return of any portion of the money. Indeed, Postachian and Berberyan admittedly agreed that the funds in the account were available to Berberyan to use to pay her debts. Her use of the money for that purpose was the only activity that ever occurred involving the funds given to Berberyan by Postachian to deposit in the Lockheed account. The fact she replenished the money she used is irrelevant. Postachian's ability to trace the source of the deposited funds back to himself is also irrelevant. All of the circumstantial evidence provided by Postachian contradicted the existence of a trust relationship as described by Postachian and Berberyan, and pointed instead to an agreement that the money was available to Berberyan to use to pay her creditors, with the understanding she would pay it back when she was able to do so. Federated is merely one such creditor, and neither she nor Postachian is entitled to shield the money in her Lockheed account from being levied upon.
The circumstances present in this case stand in stark contrast to those described in Dalakis v. Paras (1948) 86 Cal.App.2d 243, a case upon which Postachian heavily relies. In that case, which the court noted "[did] not involve the question of the rights of creditors" (id. at p. 248), there was an oral trust agreement between William Paras and John Dalakis, whereby Dalakis delivered to Paras $2,350 in cash, several war bonds, and a gold watch, to be cared for by him. (Id. at pp. 244-245.) After Paras died, Dalakis demanded return of his property from Paras's wife. The war bonds and gold watch were returned to Dalakis, but Paras's wife refused to release the money to Dalakis. Dalakis brought suit and presented the testimony of neutral third parties that corroborated the existence of the agreement between Dalakis and Paras for the latter to hold money in trust for the former. (Id. at pp. 246-247.) The trial court found that Dalakis had established that he delivered the sum of $2,350 to Paras to be held in trust, and the appellate court determined that the evidence was sufficient to support the trial court's finding. (Id. at p. 248.) In the case now before us, as the trial court found, there was nothing, other than the self-serving declarations of Postachian and Berberyan, that showed the funds in the Lockheed account were held in trust for Postachian.
Having failed to meet his burden of establishing the existence of a trust, Postachian has no claim as a trustor of entitlement to the funds in Berberyan's Lockheed account, let alone a superior claim over Federated. Because we so conclude, we need not discuss the other issues raised by the parties on appeal, such as the legality of the purported trust, the effect of the commingling of funds, or the "lowest intermediate balance rule" examined in Chrysler Credit Corp. v. Superior Court (1993) 17 Cal.App.4th 1303.
We note that Postachian contends for the first time on appeal that if we conclude the intended express oral trust failed, that we may instead find a resulting trust arose. Postachian forfeited this contention by failing to raise it below. In any event, the circumstances present here would not establish the existence of a resulting trust.
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DISPOSITION
The judgment denying the third party claim of exemption is affirmed. Costs on appeal are awarded to plaintiff and respondent, Federated Capital Services.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
SUZUKAWA, J.
We concur:
WILLHITE, Acting P. J.
MANELLA, J.