Opinion
B193927
4-16-2008
AMI SHAFRIR, Plaintiff and Respondent, v. ORAH NICHERIE, Defendant and Appellant.
Lawrence J. Semenza for Defendant and Appellant. James A. Dumas Jr. for Plaintiff and Respondent.
NOT TO BE PUBLISHED
Appellant, Orah Nicherie, appeals the judgment after a bench trial in favor of respondent, Ami Shafrir, on his complaint alleging the fraudulent transfer of funds under the Uniform Fraudulent Transfer Act (UFTA). On appeal, Nicherie claims insufficient evidence supported the trial courts finding of a fraudulent transfer. Specifically, appellant maintains that there is insufficient evidence to demonstrate the existence of intent to defraud as required under the statute. As explained herein, substantial evidence presented during the trial supported the judgment in favor of the respondent. Consequently, we affirm the judgment.
FACTUAL AND PROCEDURAL HISTORY
On March 22, 2004, respondent filed this complaint against appellant, among other defendants, alleging that she was a fraudulent transferee of approximately $1.39 million from her son Daniel Nicherie and that the transfer violated the UFTA (Civ. Code §§ 3439.04-3439.05). The following evidence was presented at a one-day bench trial.
Respondent:
In 2001, respondent, Ami Shafrir, filed suit against appellants husband and sons alleging that they took over respondents companies through a series of signature forgeries and stole more than $2 million from respondents personal accounts. In 2003, respondent obtained judgments against appellants two sons, Daniel and Abner Nicherie, for the respective sums of $ 3.9 million and $100,000. At the time of trial in the instant case, the judgments had not been satisfied and the brothers represented to the respondent that they had no money with which to pay him.
Respondent testified that the funds from his personal account were placed in approximately ten shell corporations owned by appellant and her family (the "Nicherie Companies"). Respondent also testified that appellants sons transferred an additional $ 6 million gathered from the stolen businesses into the Nicherie Companies. Once the funds were placed into the companies, respondent stated that the stolen money moved between the Nicherie Companies and posited that $1.39 million was eventually taken by appellant to Europe in the form of travelers checks.
Oren Ben Navon:
Respondents witness, Oren Ben Navon, testified that he worked for appellants son, Daniel, from March 2001 until August 2003. After serving as a collector for one of the Nicherie Companies, Digital Data, Navon was given the title of President and on-site manager of another Nicherie Company, Brooks & Associates. Mr. Navon, testified that though he was the President of the corporation, he did not know the identity of the shareholders of the corporation nor did he ever see a minute book or any share certificates for the corporation. Rather, Mr. Navon knew only that Daniel Nicherie owned the company, and thus, Mr. Navon took his orders directly from Daniel Nicherie.
Mr. Navon testified that during his time as President of Brooks & Associates the profits of the company were slim, rarely reaching $50,000 a month, which was the corporations payroll expense, and never reached $1.39 million. Mr. Navon further testified that during his tenure as President over two hundred of the corporations bills went unpaid due to insufficient funds. Mr. Navon stated that while the corporation did have $10 million in accounts receivable, representing fifteen years of accumulated receivables, this money was unrecoverable, as demonstrated by his numerous attempts at collection. Despite the insufficiency of funds to cover the corporations bills, Mr. Navon testified that the mortgages of Daniel Nicheries houses and other personal expenses were paid by the corporation.
Appellant:
Respondent introduced appellants testimony, in the form of transcripts of her depositions taken in December 2005.
Though appellant described herself as a retiree, she was the vice president of Brooks & Associates.
Appellant testified that in 2002, she traveled to Europe, as a representative of Brooks & Associates, to deposit cashiers checks totaling $1.39 million into various Swiss bank accounts over which she had exclusive control. The funds were deposited in the Bank Leumi in an account for a Swiss corporation, Kamlia, which appellant had established. Half of these funds were eventually repatriated to the United States and some were used to pay son Daniels attorneys fees. Appellant testified that she gave a portion of the money to her son, Daniel, because he had no funds on which to live, and it was "his money." The remaining portion of the funds were allegedly stolen from the account by a bank employee. Appellant hired an attorney in Zurich to help her retrieve the money, but did not maintain contact with the attorney, and never retrieved the funds.
Judgment:
Appellant did not put on an affirmative case nor did she present any evidence at trial. The trial court issued a judgment against the appellant in the sum of $695,000 plus interests and costs. The court judgment stated:
"More than sufficient evidence on a preponderance of the evidence scale demonstrates that Ora Nicherie not only conspired with her son to fraudulently convey monies out of the country to avoid payment of his debts to plaintiff, but took an active role in so doing. Indeed, the trail is only slightly tortured. Namely, Brooks and Associates is a shell corporation managed by defendant and jointly owned by her and family members. During the time period prior to the 2003 stipulated judgments, at least $1.39 million dollars was taken to Europe by [appellant]. She testified that those revenues were earned by Brooks & Associates. However, credible evidence in the form of Mr. Navons testimony reflected that no such revenues were ever generated by Brooks during that time period."
The appellant filed a timely appeal from the judgment.
DISCUSSION
Before this court, appellant maintains that the trial court lacked sufficient evidence to support its judgment that she was a fraudulent transferee under the UFTA. Specifically, appellant attacks the trial courts determination that a transfer was made with intent to defraud claiming that the evidence presented at trial did not sufficiently demonstrate intent that the courts ruling was impermissibly speculative, and all inferences made were illogical.
This court uses a substantial evidence standard when reviewing a lower courts factual findings to determine the sufficiency of evidence. (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 874; see also Hughes Tool Company v. Max Hinrichs See Co. (1980) 112 Cal.App.3d 194, 201.) Evidence is substantial if it is reasonable, credible, and of solid value. (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651.) In reviewing a claim of insufficiency of evidence, the appellate court will look at the whole record and review the evidence, contradicted or uncontradicted, in the light most favorable to the judgment rendered below. (Rivard v. Bd of Pension Commissioners of the City of Los Angeles (1985) 164 Cal.App.3d 405, 410.) Even if evidence gives rise to conflicting inferences, the appellate court must defer to the trial courts choice among conflicting reasonable inferences. (Milton v. Perceptual Develop. Corp. (1997) 53 Cal.App.4th 861, 867.) The appellate court will presume all facts the trier of fact could reasonably deduce from the evidence and defer to the trier of facts determination of the weight and credibility of that evidence. When evaluating the credibility of a witness, the reviewing court is also extremely deferential to the lower courts determination. A decision will only be reversed on the basis of credibility if the appellant can prove that the evidence is inherently improbable or implausible. (Evje v. City Title Ins. Co. (1953) 120 Cal.App.2d 488, 492.) Ultimately, the test is "whether it is reasonable for a trier of fact to make the ruling in question in light of the record." (Roddenberry v. Roddenberry, supra, 44 Cal.App.4th 634, 651 citing Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.)
Appellant argues that an appellate court may make factual determinations that are contrary to or in addition to the trial court under Code of Civil Procedure section 909. Appellant, however, misapprehends the intent of the statute which is to allow an appellate court to make additional factual findings either to affirm the lower court or in limited circumstances where new evidence or a new record would compel a reversal. (See Monsan Homes, Inc. v. Pogrebeak, (1989) 210 Cal.App.3d 826.) The statute does not abrogate the substantial evidence rule, nor based on the record before us, is it triggered here.
With these standards in mind, we consider the law governing the claims and appellants arguments on appeal.
I. Elements for Fraudulent Transfer under the UFTA
Under the UFTA (codified in Civ. Code § 3439 et seq.), a fraudulent conveyance is a transfer of an asset or interest by the debtor to a third person undertaken with the intent to prevent a creditor from reaching the transferred interest to satisfy its claim. (Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13.) A transfer is fraudulent, both as to present and future creditors, when it is made "[w]ith actual intent to hinder, delay, or defraud any creditor of the debtor." Even absent actual fraudulent intent, a transfer may be deemed fraudulent if the debtor did not receive "a reasonably equivalent value in exchange for the transfer" and "the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation." (Mejia v. Reed (2003) 31 Cal.4th 657, 664; see also Civ. Code, §§ 3439.04-3439.05.)
The UFTA also provides for the transferee liability (to the judgment creditor) in specific circumstances. Specifically, the Act states that a judgment may be entered against the following: "(1) The first transferee of the asset or the person for whose benefit the transfer was made. [¶] (2) Any subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee." (Civ. Code § 3439.08, subds. (b)(1) and (b)(2).) Neither of the parties in this case contends that the appellant does not qualify as a proper party under the Act.
Intent to defraud is a question of fact and "proof often consists of inferences from the circumstances surrounding the transfer." (Filip v. Bucurenciu (2005) 129 Cal.App.4th 825, 834 citing Annod Corp. v. Hamilton & Samuels (2002) 100 Cal.App.4th 1286, 1294.) In determining actual intent to defraud, courts often consider what have been termed "badges of fraud." Many of these "badges" are now codified in section 3439.04 of the UFTA. These badges include considerations such as whether the transfer was made to an insider, whether the transferee retained possession or control after the property was transferred, whether the transfer was disclosed, whether the debtor had been sued or threatened with suit before the transfer was made, whether the debtor removed or concealed assets, whether the value received by the debtor was reasonably equivalent to the value of the transferred asset, as well as other similar concerns. (See Civ. Code, § 3439.04, subd. (b)(1)-(8).) Though not contained in the statute, another "badge of fraud" courts consistently consider is whether the transfer occurred between a parent and child. (Wood v. Kaplan (1960) 178 Cal.App.2d 227, 230.) Though independently this "badge" is inadequate to establish intent, when coupled with other suspicious circumstances it may be sufficient to raise the inference of fraud in a conveyance. (Id. at p. 231.) No minimum number of "badges" must appear before a finding of intent to defraud; rather the badges merely provide guidance for a trial court when determining fraudulent intent. (Annod Corp. v. Hamilton & Samuels, supra, 100 Cal.App.4th at pp. 1298-1299.)
II. Appellants Claims:
Appellant claims the evidence respondent presented at trial was insufficient to establish intent to defraud and as such the judgment in favor of respondent should be reversed. The crux of appellants argument is that there is a lack of evidence that she intended to defraud the respondent. Respondent, however, maintains that it is not appellants intent, but the intent of her son, the transferor, that is relevant. Both parties are correct. The underlying intent to defraud which initially triggers the application of the UFTA is the intent of the transferor, in this case Daniel Nicherie. The transferees intent however, is not wholly irrelevant. Had there been evidence that demonstrated appellant was a good faith transferee who took the funds for reasonable consideration she might have escaped transferee liability. (See Civ. Code, § 3439.08, subd. (a).) Appellant, however, made no effort to demonstrate this, and therefore was unable to rebut the reasonable inference of liability set up under the UFTA. Instead an abundance of evidence suggests appellant and her son worked in concert to hide assets from the respondent.
There is uncontradicted evidence that respondent had claims against both of appellants sons two years prior to the transfer in question and that the claims were the subject of a RICO lawsuit and subsequent criminal indictment of her son Daniel Nicherie. This evidence demonstrates that there was a suit against appellants son before the transfer occurred, amounting to a badge of fraud. Additionally, there is evidence which suggests that the transfer occurred between Daniel Nicherie and the appellant, both corporate officers of Brooks & Associates. The transfer, therefore, was from one "insider," Daniel Nicherie, to another "insider," appellant, which amounts to another badge of fraud. Not only was the transfer to an insider, but the transfer was between a parent and child, a fact which, when considered with the other suspicious circumstances, may also support a finding of fraud. Further, the transfer was made with no consideration whatsoever—another badge of fraud. Appellant withdrew the $1.39 million (which appellant testified was her sons money) from Brooks & Associates, and gave neither the company nor her son any consideration in return.
Additionally, other circumstances surround the transfer that, while not categorized as "badges" of fraud under the statute, constitute sufficient evidence from which a reasonable trier of fact could find fraudulent intent. For example, Brooks & Associates had difficulty satisfying monthly expenditures, making it unlikely that $1.39 million could be withdrawn from the companys profits. Moreover, the use of cashiers checks to transfer $1.39 million dollars to an offshore bank in Switzerland, suggests appellant and her son wanted to render the money untraceable. There is also evidence that appellant took very little action to recover over $500,000 that purportedly disappeared from the Swiss bank where the $1.39 million was originally deposited.
Finally, none of the appellants specific arguments on appeal are persuasive. In her brief appellant focuses on three major arguments. First, appellant claims the trial court speculated in finding that the funds, which were the subject of the initial lawsuit against appellants sons, taken from respondent were the same funds transferred to Europe by appellant. The trial court, however, never made a factual determination regarding whether the funds that were transferred originated with the respondent. In fact, such a determination was not necessary to determine that appellant acted in violation of the UFTA. The focus of the Act is on whether a debtor transferred money in an attempt to escape paying a creditor. The Act does not, however, focus on the underlying reason for the debt, nor does the Act require proof concerning the source of the funds transferred. Therefore, regardless of whether the monies transferred in this case were the actual funds stolen from the respondent, or other assets of Daniel Nicherie, it is the surrounding circumstances of the transfer that triggered the UFTA.
Appellant next argues that the trial courts assessment of Oren Ben Navons testimony as credible was illogical. An appellate court, however, will disturb a trial courts ruling on the credibility of a witness only when the finding is inherently improbable. Appellant maintains that Mr. Navons testimony was vague, inconsistent, and contradictory to that of appellants, and as such was improperly deemed credible. Nothing in the record indicates Mr. Navons testimony was inherently improbable. The testimony of Mr. Navon and the deposition transcript of appellant conflict as to the financial status of Brooks & Associates. This conflict, however, does not render the credibility determination of the trial court illogical. Rather, the conflict was one specifically for the trial court to resolve, and only if that resolution was inherently impossible, may this court disturb the trial courts judgment. (People v. Huston (1943) 21 Cal.2d 690, 693 ["conflicts and even testimony which is subject to justifiable suspicion do not justify the reversal of a judgment, for it is the exclusive province of the trial judge or jury to determine the credibility of a witness and the truth or falsity of the facts upon which a determination depends"].) Because there is no evidence that suggested Mr. Navons testimony was inherently improbable, we will not disturb the trial courts assessment of him.
Finally, appellant argues the trial court improperly concluded that the Nicherie family engaged in operating "shell" corporations. However, the trial judge, upon making the determination that Brooks & Associates was a corporation with very few assets, looked to the testimony of Ben Navon and determined that the Nicherie corporations were set up as "shells" for the financial benefit of Daniel Nicherie. Even without this determination, however, as mentioned above, the trial court was still left with ample evidence to support a finding of intent to defraud.
In view of all of the foregoing, the trial court had sufficient evidence to find that appellant had the requisite intent to defraud required under the UFTA.
DISPOSITION
The judgment is affirmed. Respondent is entitled to costs on appeal.
We concur:
PERLUSS, P.J.
ZELON, J.