Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Santa Clara County Super. Ct. No. CV024877
Mihara, Acting P.J.
Defendants Max Group Corporation (Max) and Moses Hall appeal from the trial court’s judgment in favor of plaintiff Law Offices of Ann Koo (Koo). Max and Hall challenge the sufficiency of the evidence to support the court’s finding that they were liable for conversion, claim that a documentary exhibit was inadmissible, and contest the court’s assessment of damages. Koo also appeals from the judgment and contends that the trial court should have ruled in its favor on Koo’s fraudulent transfer causes of action. We reject all of these contentions and affirm the judgment.
I. Background
ACS Innovations, Inc. (ACS) became Koo’s client in 1995. In March 1998, ACS, acting through Michael Ho, who was ACS’s chief financial officer and general manager, entered into a fee agreement with Koo under which Koo agreed to represent ACS in litigation against Max in return for hourly fees and expenses. The fee agreement provided for interest of 1.5 percent per month on unpaid fees and costs, and entitled Koo to recover from ACS any fees and costs incurred in collecting unpaid fees and costs.
The fee agreement also granted Koo a lien against “all property and funds involved in Client’s case” to pay for Koo’s fees and costs. Koo did not advise ACS or Ho in writing to obtain the advice of an independent lawyer concerning the lien provision in the fee agreement. However, Koo’s employee, attorney George Williamson, did orally explain to Ho, before he signed the fee agreement, that “you always have the right to seek advice of independent counsel” with regard to the fee agreement.
In April 1998, Koo filed a lawsuit on behalf of ACS against Max. Max filed a cross-complaint for conversion against ACS in which Max alleged that it was entitled to an offset of $151,740 against ACS’s claims. Hall was Max’s attorney in the ACS/Max litigation. ACS prevailed on its claims, and Max’s cross-complaint was unsuccessful. Judgment for ACS was entered in May 2001 against Max for $194,151, plus interest at the legal rate from January 1998 and costs.
Koo spent in excess of 806 billable hours on the ACS/Max litigation. Koo’s billing rate was $180 per hour up until January 1999 when the rate rose to $250 per hour. Although Koo had been performing other work for ACS prior to the ACS/Max litigation, Koo did not perform any work for ACS other than the ACS/Max litigation after November 30, 1999. Initially, ACS paid its bills from Koo, but ACS fell behind and eventually stopped paying its bills from Koo in March 2001. Ho urged Koo to proceed with the litigation and promised that Koo would be able to “recover the monies from the judgment and pay our fees from that judgment . . . .” Koo informed Ho that the fee agreement might be invalid because it failed to inform ACS in writing of its right to seek independent counsel. Ho orally reaffirmed ACS’s agreement that Koo could have a lien on the judgment to secure Koo’s fees and costs. In reliance on Ho’s assurances, Koo proceeded with the ACS/Max trial court litigation and the defense of that judgment on appeal.
In August 2001, Koo served notice on Max and Hall of Koo’s lien on ACS’s judgment. The May 2001 judgment was not final until February 2003. Upon the judgment’s finality, Koo attempted to levy on Max’s bank account to enforce the judgment, but Max successfully quashed the levy on the ground that ACS’s corporate status had been suspended. At some point Ho left ACS, and Ivan Lek became Koo’s contact person at ACS.
In April 2003, Max, represented by Hall, initiated an action against ACS in Los Angeles County in which Max alleged that ACS owed Max $151,740. Hall had communicated with Lek, who had acknowledged that ACS owed Max $151,740. Max’s action “was premised on the same operative facts” that had been “previously litigated against ACS unsuccessfully” in the cross-complaint in the Santa Clara action, and the Los Angeles action sought the “same damages” as had been sought in the Santa Clara cross-complaint. In fact, the $151,740 sought in the Los Angeles action was owed not by ACS Innovations, Inc., but by a separate corporation called “ACS Innovation International Pte Ltd., a Singapore corporation.” Neither Max nor Hall notified Koo of the Los Angeles lawsuit.
In August 2003, the Los Angeles County Superior Court entered a default judgment for Max in the amount of $228,668 against ACS. “[Koo’s] attorney lien was established before [Max’s] default judgment was entered.” Neither Max nor Hall notified Koo of the default judgment.
The parties stipulated to this fact at trial.
ACS’s corporate status was subsequently restored, and Koo obtained a writ of execution on ACS’s behalf for $323,384.65 from the Santa Clara Superior Court on the Santa Clara judgment. The writ directed the Los Angeles County Sheriff to levy on Max’s bank account. After unsuccessfully attempting to quash the levy on Max’s bank account, Max and Hall obtained a writ of execution from the Los Angeles Superior Court on the Los Angeles judgment for $232,486.13. The Los Angeles County Sheriff thereafter executed the Santa Clara writ and took into possession $323,406.65 from Max’s bank account. Max and Hall served the sheriff with their writ of execution, and the sheriff responded by paying ACS $88,125.92 of the levied funds in December 2003, and paying Max and Hall the remaining $235,280.73 of the levied funds in January 2004. After Koo received the $88,125.92 that ACS had recovered from the sheriff, ACS still owed Koo $192,943.34. ACS never made any further payments toward that debt.
There was a levy fee of $30 on top of the amount due ACS.
Koo first learned of the Los Angeles action when Max and Hall levied on the funds in the sheriff’s possession in late December 2003. Koo’s subsequent efforts to set aside the Los Angeles default and default judgment were unsuccessful. Koo incurred additional fees in attempting to collect its fees. Koo filed the instant action in August 2004. Koo alleged conversion and fraudulent transfer causes of action against Max, Hall, and Lek, and a breach of contract cause of action against ACS. Koo alleged that ACS had breached its fee agreement with Koo, and that Max, Hall, and Lek had converted the funds levied upon by the sheriff and had fraudulently transferred those funds to Max.
Koo’s complaint contained many other causes of action, but none of them are relevant to the issues raised on appeal.
ACS and Lek defaulted. Koo’s action for conversion and fraudulent transfer against Max and Hall was tried to the court, and the trial also served as the default prove-up hearing for Koo’s action against ACS and Lek. By the time of trial, ACS’s debt to Koo had risen to $332,494.15, including interest and the cost of collection.
The trial court issued a statement of decision. It found that ACS “did not dispute [Koo’s] lien and, therefore, [Koo] had no reason to bring a separate action to enforce its lien immediately after the judgment in the underlying action. [Koo] met the requirement of bringing a separate action to enforce its lien against Max Group by bringing the instant action.” The court awarded Koo $118,092.88 (plus prejudgment interest from January 2004) on its conversion cause of action. The court rejected Koo’s fraudulent transfer causes of action on the ground that a judgment is not a transfer and the satisfaction of a judgment is not an exchange for something other than reasonably equivalent value. The court entered a default judgment against ACS for the amounts that would not be satisfied by Koo’s judgment against Max and Hall.
The court’s March 16, 2007 statement of decision provided that Koo would “prepare and submit a proposed form of judgment.” No judgment appears in the record, which consists of reporters’ transcripts, an appellant’s appendix prepared by Max and Hall, and a respondent’s appendix prepared by Koo, but the notices of appeal refer to an April 2007 judgment. Max filed a timely notice of appeal on April 17, 2007. Koo filed a notice of cross-appeal on May 29, 2007. Hall filed a notice of appeal on June 7, 2007.
II. Discussion
A. The Appeal By Max and Hall
1. Sufficiency of the Evidence of Conversion
Max and Hall contend that Koo’s conversion cause of action was not supported by substantial evidence because there was a lack of evidence that Koo’s lien rights arose prior to the sheriff’s January 2004 distribution of the levied funds to Max and Hall. They contend that Koo’s lien could not have priority over their judgment lien until after the conclusion of Koo’s action against them and ACS to establish the validity and amount of the lien. Max and Hall also contend that Koo could not succeed on a conversion cause of action because the funds in the possession of the sheriff did not belong to Koo, but to ACS.
Max and Hall claim that Koo was required to bring a “separate, independent action” against ACS to establish the validity and amount of the lien. They rely on Brown v. Superior Court (2004) 116 Cal.App.4th 320 (Brown). Brown is inapplicable here, as it dealt with a very different situation. In Brown, Cyclon had obtained a judgment against Vortran. Vortran subsequently obtained a judgment against VMT. Cyclon filed a notice of lien in the Vortran/VMT action seeking to obtain satisfaction of Cyclon’s judgment from the amounts due Vortran from VMT. Vortran’s attorney, Brown, filed a motion in the Vortran/VMT action asserting that his contractual lien on Vortran’s recovery was entitled to priority over Cyclon’s judgment lien. The trial court struck Brown’s motion on the ground that he was not a party to the Vortran/VMT action.
The Court of Appeal in Brown acknowledged that an attorney’s contractual lien is created and takes effect when the fee agreement is signed, and that it has priority over a judgment lien created by a judgment creditor’s subsequent filing of a notice of lien. (Brown, supra, 116 Cal.App.4th at pp. 327-328.) “[I]f Brown’s claim of a lien on the proceeds of the VMT judgment is valid, his lien has priority over Cyclon’s lien.” (Brown, at p. 328.) However, the statutes governing liens on judgments in pending actions did not permit Brown to satisfy his contractual lien by simply filing a motion in the Vortran/VMT action because he was not a party to that action. After the entry of the judgment against which an attorney has a contractual lien, the attorney must bring an action against the client in order to establish the validity and amount of the lien and to enforce the lien. (Ibid.) Such an action may be combined with an action against the competing judgment creditor to establish the priority of the attorney’s contractual lien. Thus, Brown needed to bring an action against Vortran and Cyclon to establish the validity and amount of his lien and its priority. (Ibid.)
Here, unlike in Brown, neither ACS, which was a judgment creditor of Max, nor Max, which was a judgment creditor of ACS, filed a notice of judgment lien in a pending action. ACS, through Koo, attempted to satisfy its judgment lien by executing on Max’s bank account, not on Max’s Los Angeles judgment. Max attempted to satisfy its judgment lien by executing on the funds from Max’s own bank account that ACS had had the sheriff seize, not by filing a notice of lien in the Santa Clara action, which was at that point no longer pending. The jurisdictional issue resolved in Brown simply is not present in this case. Consequently, Brown’s “separate, independent action” requirement is not applicable.
Max and Hall claim that Koo could not prevail on a conversion cause of action because Koo “was not the owner of the funds held by the Los Angeles County Sheriff on January 7, 2004.” They cite no authority whatsoever for this proposition. “There is authority for the proposition, however, that one who has a lien on personal property, though not in possession or entitled to immediate possession, may recover damages from one who wrongfully assumes dominion over the property subject to the lien and who diminishes the value of the security or operates to make it less effectual.” (Taylor v. S & M Lamp Co. (1961) 190 Cal.App.2d 700, 712.) “California recognizes conversion as a cause of action that a creditor with a superior claim to collateral may state against another creditor that has possession of the collateral.” (Frazier Nuts, Inc. v. American Ag Credit (2006) 141 Cal.App.4th 1263, 1282.) Koo’s lien on ACS’s judgment against Max was a sufficient basis for Koo to bring a conversion cause of action against Max for Max’s wrongful taking of the money to which Koo had a superior claim.
Max and Hall challenge the trial court’s finding that Koo’s charging lien was “established” at the time of November 2003 writs of execution. They contend that the charging lien has not yet been established. This contention is meritless. Max and Hall stipulated at trial that Koo’s “lien was established before [Max’s] default judgment was entered” in August 2003, which was well in advance of Max’s taking of the money in the possession of the sheriff. And it is well established that an attorney’s contractual lien is established when the fee agreement is signed (Brown, supra, 116 Cal.App.4th at pp. 327-328), which occurred here in March 1998, long before Max’s wrongful taking.
Max and Hall argue that Koo failed to prove that they engaged in any “wrongful act” in obtaining the funds that the sheriff had seized. Again, they cite no authority. Since Max and Hall had long had notice of Koo’s superior lien on ACS’s judgment, their execution on the funds seized by the sheriff to satisfy their inferior lien was obviously wrongful.
2. Damages
a. Admission of Exhibit 22
Max and Hall claim that the trial court erred in admitting exhibit 22 into evidence over their objections. They argue that the erroneous admission of exhibit 22 prejudiced them because the trial court applied ACS’s payments to invoices for work done by Koo for ACS on other matters, rather than the ACS/Max litigation, even though invoices for these other matters were not produced at trial, but only summarized in exhibit 22. We conclude that the trial court did not abuse its discretion in admitting exhibit 22 into evidence.
Two documentary exhibits were introduced at trial regarding the amounts owed by ACS to Koo. Exhibit 22 is a summary of the date and amount of every invoice that Koo ever sent to ACS for any work, the interest that accumulated on ACS’s cumulative debt to Koo, all payments made by ACS to Koo, and the cumulative balance due Koo from ACS through the years. Exhibit 23 consists of each invoice from Koo to ACS for Koo’s work on the ACS/Max litigation. Although Max and Hall objected to the admission of exhibit 23 at trial on hearsay and foundational grounds, Max and Hall do not renew any objections to exhibit 23 on appeal. They claim that the trial court erred in admitting exhibit 22 over their “foundation,” “hearsay,” and “secondary evidence” objections.
Williamson’s testimony provided the foundation for the admission of exhibit 22. He testified at trial that he prepared the ACS invoices and maintained the records regarding them. Exhibit 22 was based on data kept by Koo in the regular course of business and “set forth each of the invoices” that Koo sent to ACS, the interest on the unpaid billings, the payments made on those invoices, and the balance owing. Williamson testified that he had entered the underlying data into the computer on a daily basis and printed out a compilation like exhibit 22 every two weeks so that he could review it for accuracy.
The secondary evidence rule did not preclude the trial court from admitting exhibit 22. Evidence Code section 1521 provides: “(a) The content of a writing may be proved by otherwise admissible secondary evidence. The court shall exclude secondary evidence of the content of writing if the court determines either of the following: [¶] (1) A genuine dispute exists concerning material terms of the writing and justice requires the exclusion. [¶] (2) Admission of the secondary evidence would be unfair.” (Evid. Code, § 1521, subd. (a).) Koo was not attempting to prove the “content of a writing.” Exhibit 22 was admitted into evidence to show the amounts that Koo had billed ACS for services and interest, and the amount of the payments made by ACS to Koo. Max and Hall provided no evidence that raised any “genuine dispute” about the amounts that Koo had billed or the amount of the payments made by ACS to Koo, or that demonstrated that the admission of this evidence would be “unfair” to them. Consequently, the court did not err in overruling the “secondary evidence” objection to the admission of exhibit 22.
Max and Hall also argue that the trial court violated Evidence Code section 1523, which precludes the admission of “oral testimony” to prove the contents of a writing. However, Max and Hall’s objections to Williamson’s testimony were not directed at testimony to the content of any writings.
Max and Hall’s foundation and hearsay objections were similarly meritless. Williamson’s testimony provided an adequate foundation for the admission of exhibit 22 as a business record. “Computer printouts are admissible and are presumed to be an accurate representation of the data in the computer. (Evid. Code, § 1500.5.) If offered for the truth, however, they must qualify under some hearsay exception, such as business records under Evidence Code sections 1271. A trial court has wide discretion in determining whether sufficient evidence is adduced to qualify evidence as a business record.” (Aguimatang v. California State Lottery (1991) 234 Cal.App.3d 769, 797, fns. and citations omitted.)
Max and Hall suggest, but never actually argue, that they are challenging exhibit 22 on the ground that it lacked authentication. “Appellate courts are not obliged to develop arguments which are merely suggested.” (Tate v. Saratoga Savings & Loan Assn. (1989) 216 Cal.App.3d 843, 855-856, disagreed with on other grounds in Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362.) In any case, no authentication objection was interposed below to exhibit 22, so any such contention is waived. (Evid. Code, § 353.) And Williamson’s testimony adequately authenticated exhibit 22. (Evid. Code, § 1401.)
Williamson testified that the underlying data was entered into the computer, and exhibit 22 was a computer printout of that data. Exhibit 22 was admissible for its truth if it qualified as a business record under Evidence Code section 1271. “Evidence of a writing made as a record of an act, condition, or event is not made inadmissible by the hearsay rule when offered to prove the act, condition, or event if: [¶] (a) The writing was made in the regular course of a business; [¶] (b) The writing was made at or near the time of the act, condition, or event; [¶] (c) The custodian or other qualified witness testifies to its identity and the mode of its preparation; and [¶] (d) The sources of information and method and time of preparation were such as to indicate its trustworthiness.” (Evid. Code, § 1271.)
Williamson testified that, in the regular course of business, each Koo attorney servicing a client entered the underlying data on a daily basis and printed out a summary to review its accuracy every two weeks or every month. Exhibit 22 was the current summary for ACS, the client that Williamson serviced. Williamson, who had himself entered most of the data regarding ACS and who was familiar with Koo’s business practices, was a qualified witness. His testimony adequately established that exhibit 22 was made in the regular course of business, and that the underlying data was recorded in a timely fashion from trustworthy sources. Hence, the trial court did not abuse its discretion in admitting exhibit 22 over Max and Hall’s foundation and hearsay objections.
b. Sufficiency of the Evidence of Damages
Max and Hall seem to argue that the evidence does not support the trial court’s damage award.
Koo sought damages of $192,943.34 on the conversion cause of action. The $192,943.34 amount appeared on exhibit 22 as the total amount that ACS owed Koo on December 23, 2003 for all matters, including interest on past due amounts, after Koo received the $88,125.92 that ACS had recovered from the sheriff. The trial court noted in its statement of decision that exhibit 22 conflicted with Williamson’s trial testimony that the $192,943.34 due on December 23, 2003 was solely attributable to the ACS/Max litigation. Given this conflict, the trial court concluded that Koo had failed to prove that it was entitled to the entire $192,943.34.
Instead, the trial court calculated damages based on the evidence that it credited. Based on exhibit 22, the court found that ACS had made payments of $148,027.85, including the $88,125.92 payment. The trial court “applied these payments to the earliest invoices, including interest claimed by [Koo], since these amounts were not disputed by ACS and ACS has paid the money already.” After applying these payments, “the total of all remaining invoices on the [ACS/Max litigation] through the date of the conversion . . . equals $118,092.88.” This was the amount that the court awarded Koo as damages on the conversion cause of action. The court noted in a footnote that “[t]he $88,125.92 payment is included with the other payments and applied to the earlier invoices regardless of whether they are related to the [ACS/Max litigation] because there was no evidence presented at trial that this payment was obtained through execution of [Koo’s] charging lien, rather than as a regular payment from ACS.”
Much of the argument in Max and Hall’s briefing is premised on their contention that exhibit 22 was inadmissible, a contention we have already rejected. They also contend that the trial court erred in applying the $88,125.92 disbursed to Koo by the sheriff to the amounts ACS owed Koo on matters other than the ACS/Max litigation because “those funds [from the Sheriff] were obtained pursuant to the contractual lien.” (Bold caps omitted.)
The trial court rejected this contention, and the record supports the trial court’s conclusion. The evidence indisputably establishes that Koo received the funds from the sheriff on behalf of ACS as a result of the execution of ACS’s judgment lien, not on Koo’s own behalf as a result of any execution of Koo’s contractual lien. There was no evidence presented at trial that Koo ever executed its contractual lien against any funds. The trial court could have concluded that exhibit 22’s notation of the $88,125.92 payment from ACS was a result of ACS’s voluntary transfer of the funds from the sheriff to Koo as partial payment of the total balance ACS owed Koo for all matters.
B. Koo’s Cross-Appeal
Koo filed a timely notice of cross-appeal, but the only brief that Koo has filed is entitled “Respondent’s Brief.” No part of this brief is denominated as Koo’s brief in its cross-appeal. Nevertheless, the fifth of the six sections in this brief contains an argument that the trial court erred in rejecting Koo’s fraudulent transfer causes of action.
Koo contends that a fraudulent transfer occurred when ACS “incurred an obligation” to Max “by way of” the August 2003 default judgment Max obtained against ACS, and ACS “had $235,280.73 worth of [ACS’s] assets transferred by way of” Max’s levy on the funds held by the sheriff. Koo contends that these “transfers” rendered ACS insolvent and unable to pay its debt to Koo.
Koo claims that these “transfers” were fraudulent as to it under Civil Code sections 3439.05 and 3439.04. Civil Code section 3439.05 does not require proof of fraudulent intent. “A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.” (Civ. Code, § 3439.05.) Civil Code section 3439.04 does require proof of fraudulent intent under these circumstances. “A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation . . . [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor.” (Civ. Code, § 3439.04, subd. (a)(1).)
Koo proceeded under Civil Code section 3439.04, subdivision (a)(1). Subdivision (a)(2), which did not apply under these circumstances, does not require proof of actual fraudulent intent.
Koo claimed that there were two fraudulent transfers. One alleged fraudulent transfer was the default judgment. The other alleged fraudulent transfer was the transfer of the funds from the sheriff to Max. The trial court concluded that the default judgment was not a “transfer” and that the satisfaction of the default judgment could not be a fraudulent transfer because it was an exchange for a reasonably equivalent value and Koo failed to prove that ACS intended to defraud Koo.
The trial court’s rulings are supported by substantial evidence. “‘Transfer’ means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance.” (Civ. Code, § 3439.01, subd. (i) [defining “transfer” in connection with the fraudulent transfer statutes].) A money judgment is not a “mode . . . of disposing of or parting with” any asset. A money judgment obligates one party to make recompense to the other party, but the judgment does not itself dispose of or otherwise convey any asset.
The transfer of the funds from the sheriff to Max was also not a fraudulent transfer. The satisfaction of a valid default judgment is plainly an exchange for a “reasonably equivalent value.” Koo claims that the default judgment cannot be relied upon because that default judgment was obtained by “‘extrinsic fraud’” and therefore was invalid as to Koo. It was the trial court’s role to evaluate the evidence and determine whether Koo had proved fraud. (Leff v. Gunter (1983) 33 Cal.3d 508, 518; Reddy v. Gonzalez (1992) 8 Cal.App.4th 118, 123.) The evidence of ACS’s intent was ambiguous, and the record does not indisputably establish fraud. Accordingly, we must accept the trial court’s conclusion that Koo did not establish fraud. Since Koo did not establish the requisite elements of a fraudulent transfer, the trial court did not err in rejecting Koo’s fraudulent transfer causes of action.
III. Disposition
The judgment is affirmed.
WE CONCUR: McAdams, J., Duffy, J.
Max and Hall objected when Williamson was asked if the data in exhibit 22 was regularly kept by Koo. They stated: “If you submit a summary, you must submit all of the documentation upon which the summary is created in order to determine whether the summary is accurate. It’s the data that has to be produced.” This objection was overruled by the trial court, but it did not challenge Williamson’s testimony to the content of any writing. Instead, this objection, like the others, appeared to challenge the admissibility of exhibit 22. We fail to see a separate objection below that challenged Williamson’s testimony on the ground that he was testifying to the content of a writing. Hall subsequently objected to the foundation for the admission of exhibit 22 on the ground that Williamson lacked personal knowledge of how exhibit 22 was created because he had not created it himself. But this too was not an objection to Williamson’s testimony (which did establish that he had created exhibit 22), but to the foundation for exhibit 22.