Summary
summarizing California law regarding identity theft
Summary of this case from Szanto v. Szanto (In re Szanto)Opinion
G039194
10-29-2008
PHILLIP T. SZANTO, Plaintiff and Appellant, v. PETER SZANTO, Defendant and Respondent.
Robert S. Lewin for Plaintiff and Appellant. Peter Szanto, in pro. per., for Defendant and Respondent.
Not to be Published
Phillip Szanto appeals from the judgment entered against him in the lawsuit he brought against his father, Peter Szanto. Among other claims of wrongdoing, Phillip alleged that his father had conducted various financial transactions, including the establishment of credit accounts and bank and brokerage accounts, the filing of tax returns, and the initiation of litigation, all in Phillips name and under his social security number, but without Phillips knowledge or consent. Phillip alleged he had been harmed both emotionally and financially by that misconduct, which he characterized as a cause of action for "identity theft," and requested an award of damages.
Because both parties share the same last name, we will refer to each by his first name, for purposes of clarity. No disrespect is intended.
However, the trial court sustained Peters demurrer to this "identity theft" cause of action, without leave to amend, on the basis that no such cause of action existed in California. Phillip was allowed to proceed to trial on other claims, including a claim styled "invasion of privacy" which was also based on Peters alleged misuse of his personal information, and Peter prevailed on those claims.
Phillip asserts the trial court erred in sustaining Peters demurrer without leave to amend to the "identity theft" cause of action, and that, as a result, he is entitled to a reversal of the judgment and a remand of the case to the trial court for further proceedings on that claim. We agree.
The allegations contained in Phillips "identity theft" cause of action are sufficient to state a claim for relief based upon the financial and emotional harm he describes incurring as a result of Peters allegedly wrongful and unauthorized appropriation of Phillips identity. Moreover, the fact that Phillip failed to establish Peter was liable for "invasion of privacy" based upon the same conduct does not foreclose his right to prove the "identity theft" claim in a subsequent trial. Significantly, the jury in the first trial specifically concluded that Peter had used Phillips identity without his permission, but did not reach any conclusion about whether that conduct had caused harm to Phillip. Phillip is entitled to a trial on that specific claim.
The judgment is reversed, and the case is remanded to the trial court for further proceedings on Phillips "identity theft" claim.
For his part, Peter has filed an application with this court "to enforce" an order of the trial court regarding Phillips improper designation of the reporters transcript on appeal. Peter apparently did file a motion in the trial court complaining that Phillips initial designation of the reporters transcript on appeal had failed to specify the "points to be raised on appeal," as required by California Rules of Court, rule 8.130, subdivision (2), in cases where appellant has designated less than the entire transcript. And the trial court subsequently issued an order stating only that it was "sustain[ing]" the objection to the original designation, but expressly declining to take any other action. In the interim, however, Phillip had already filed an amended designation, in which he set forth two issues he intended to raise on appeal. If Peter were merely asking us to "enforce" the trial courts order, as the title of his application states, we would deny it because there is simply nothing to "enforce." The trial courts order merely acknowledges the problem and then expressly does nothing about it. But what Peter is actually asking this court to do is dismiss the appeal on the basis of this minor, correctible, non-jurisdictional error which caused him no prejudice. We decline to do so.
FACTS
In July of 2005, Phillip filed a complaint alleging three causes of action. The first cause of action, styled "identity theft," alleged that Phillip had reached the age of 18 in July of 2002. However, within a year of his filing of the complaint, Phillip discovered, when attempting to open a bank account, that an account already existed under his name and social security number. Phillip had been unaware of the account, and had not authorized its creation.
Thereafter, Phillip allegedly requested credit reports for himself from the major credit reporting agencies, and learned that credit accounts, aggregating in excess of $500,000, existed in his name and under his social security number, and that he was reported to have debt aggregating over $120,000. These accounts were opened, and the debt incurred, without Phillips knowledge or consent. Phillip also requested copies of his income tax returns from the Internal Revenue Service, and learned that tax returns had been filed in his name and under his social security number, for tax years 2001-2003, all without his knowledge or consent. Again, these tax returns were allegedly filed without Phillips knowledge or consent, and although they reflected that refunds were owing to Phillip, he never received any such amounts.
Phillip also alleged he had been contacted by an attorney employed by a law firm specializing in class action lawsuits, and she informed him that he was identified as the lead plaintiff in a "multi-million dollar securities" class-action litigation. Phillip had no prior knowledge of this litigation, and had not agreed to be the lead plaintiff. In a conversation with that same attorney, Phillip also learned he had been the plaintiff in a case litigated in Riverside County, again without his consent.
Phillip alleged, based upon specific circumstantial evidence, that Peter, his father, had created all of these accounts, filed the tax returns, and otherwise carried out the alleged acts amounting to the "theft" of Phillips identity, conduct which is proscribed by Penal Code section 530.5(a). Phillip sought orders immediately freezing the disputed accounts, restraining Peter from engaging in further acts during the pendency of the litigation, and declaring a constructive trust over the accounts. Phillip also alleged that as a direct and proximate cause of Peters actions, he had suffered personal injuries including emotional distress, as well as economic damages in excess of $100,000. Phillip also alleged an entitlement to punitive damages.
Penal Code 530.5, subdivision (a), provides as follows: "Every person who willfully obtains personal identifying information, as defined in subdivision (b) of Section 530.55, of another person, and uses that information for any unlawful purpose, including to obtain, or attempt to obtain, credit, goods, services, real property, or medical information without the consent of that person, is guilty of a public offense, and upon conviction therefor, shall be punished by a fine, by imprisonment in a county jail not to exceed one year, or by both a fine and imprisonment, or by imprisonment in the state prison."
Phillips second cause of action, styled "conversion," incorporated by reference the allegations supporting the identity theft claim, and additionally alleged that when he turned 13 years of age, he had received a cash gift of $25,000 from his grandparents. Peter allegedly took control of the money, and told Phillip he would invest the money to use for Phillips education. As a result of that promise, Peter allegedly took on fiduciary obligations to Phillip. Phillip also alleged Peter had wrongfully taken possession and control over artwork valued at $100,000, which had been given to Phillip by his grandparents when he was 16. Finally, Phillip alleged Peter had taken control over the salary and stock he accumulated when he began working at age 16, promising he would invest the assets and use them to buy Phillip a car when he turned 18.
Subsequently, Phillip earned scholarships which covered the cost of his tuition, books and living expenses, plus grants. Peter allegedly took control of the grant money as well, but paid little, if anything toward Phillips school expenses.
When Phillip became an adult in 2002, Peter allegedly breached his fiduciary duty to turn over the Bar Mitzvah money and the grant money to Phillip; refused to purchase the car as promised, and refused to account to Phillip for the artwork. Instead, Peter allegedly exercised dominion and control over the money and assets belonging to Phillip, and converted them to his own use. Based upon those acts of conversion, Phillip asked for an order decreeing that Peter holds certain accounts currently in Phillips name and under his social security number as a constructive trustee for Phillip. Phillip also requested monetary damages.
Phillips third cause of action, styled "invasion of privacy," also incorporated the allegations of the identity theft claim, and alleged that those acts had also amounted to an invasion of his privacy. Phillip alleged that such acts would be "highly offensive to a reasonable person," had injured Phillip emotionally and physically, and thus warranted an award of monetary damages against Peter.
Peter demurred to all three causes of action, and the court sustained the demurrers with leave to amend. As the court explained, it was sustaining the demurrer to the first cause of action because "plaintiff failed to cite any legal authority providing for a civil cause of action for identity theft against defendant."
As to the conversion cause of action, the court reasoned that Phillip had failed to specifically allege he was damaged by Peters alleged conversion; that the allegations regarding conversion of the "scholarship and grant money" failed to specify an identifiable sum capable of being converted; and the earnings of an unemancipated minor belong equally to the child and his or her parents, and thus the parent could not be held liable for "converting" them.
With respect to the invasion of privacy cause of action, the court explained that Phillip had failed to allege he had a reasonable expectation of privacy in his confidential information under the circumstances, or that Peters alleged conduct was a "serious invasion" of his privacy.
Phillip filed a first amended complaint, this time alleging 13 causes of action. The first cause of action again alleged identity theft, but contained additional allegations stating that statutes which deter and prohibit persons from wrongfully using someone elses identity in connection with financial transactions were intended, at least in part, to protect those innocent victims of identity theft from the deleterious effects of such conduct.
Phillips second through fifth causes of action alleged breach of fiduciary duty, breach of contract, conversion and common count with regard to Peters allegedly wrongful retention of the $25,000 given to Phillip by his grandparents.
Phillips sixth and seventh causes of action alleged conversion and bailment with regard to the artwork given to him and allegedly taken by Peter.
Phillips eighth cause of action alleged conversion of the scholarship and grant monies he had received during his matriculation in college; his ninth and tenth causes of action alleged breach of contract and breach of fiduciary duty with regard to Peters alleged failure to fulfill his promise to purchase Phillip a car using the money Phillip had earned; the eleventh cause of action alleged conversion of monies Phillip had earned after the age of 18; the twelfth cause of action alleged invasion of privacy; and the thirteenth cause of action simply alleged an entitlement to injunctive relief.
Peter once again demurred, arguing that the first cause of action for identity theft, as well as the eleventh and twelfth causes of action for conversion and invasion of privacy did not state facts sufficient to constitute a cause of action. He also demurred to the second through fourth, seventh, and ninth and tenth causes of action on the basis they were barred by the applicable statute of limitations.
The court sustained the demurrer to the cause of action for identity theft, this time without leave to amend. The court sustained the demurrers to Phillips second, third, fourth, ninth, tenth and eleventh causes of action with leave to amend, and overruled the demurrers with respect to the seventh cause of action (bailment) and 12th causes of action (invasion of privacy).
Unfortunately, Phillip does not include any second amended complaint in the record he has provided to us. Consequently, we cannot discern with certainty which, if any, of his claims were successfully amended for trial following the second demurrer. We know only that the fifth, sixth and eighth causes of action in his first amended complaint (asserting common count relating to the $25,000 cash gift, the conversion of the artwork, and the conversion of his scholarship and grant money, respectively) — which went unchallenged in the second demurrer — as well as the seventh and twelfth causes of action (alleging bailment of the artwork and invasion of privacy) — which survived demurrer — were left intact for trial.
Peter asserts in his brief, albeit without citation to the record, that Phillip did not amend his complaint after the second demurrer.
And we also know that Peter prevailed on each of the causes of actions tried. The jurys special verdict concluded that with respect to Phillips claim for common count, Peter did receive money from Phillip that was intended to be used for Phillips benefit; and that at least some of the money was used other than for Phillips benefit. However, the jury concluded that Peter never "refused to give this money to [Peter.]"
The jury also concluded that Phillip never had an ownership interest in the artwork he claimed, which disposed of his conversion and bailment claims in connection with that issue.
With respect to Phillips privacy claims, the jury did specifically conclude that Peter did use Phillips name or identity without his permission, while also concluding that Peter did not "gain [any] advantage" by using it. Per the instructions given in the special verdict, once the jury reached that latter conclusion it did not address the question of whether Phillip had been harmed by that unauthorized use. The jury also concluded that while Phillip did have a reasonable expectation of privacy in his name, his credit, and his financial affairs, Peter did not "intentionally intrude" on that privacy in the use of Phillips name and in his credit and financial affairs. Finally, the jury concluded that while Phillip had a reasonable expectation of privacy "in the use of his identity under the circumstances," Peter did not "invade [Phillips] privacy in the use of his identity."
I
Phillip does not challenge the disposition of any of the claims which proceeded to trial. His sole contention on appeal is that the court erred in sustaining a demurrer, without leave to amend, to his cause of action based on "identity theft." He argues that given the existence of a Penal Code statute which specifically criminalizes the very "identity theft" conduct alleged in his first cause of action, we must now recognize that a civil cause of action for "identity theft" exists under California law. We conclude the trial court did err in sustaining the demurrer, because the allegations in Phillips "identity theft" claim already state a claim for relief under existing legal theories, and thus he should have been given the opportunity to go to trial on the claim.
We start with the proposition that "[a] demurrer tests the sufficiency of the complaint as a matter of law; as such, it raises only a question of law. (See Code Civ. Proc., § 589; Schmidt v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706.) On a question of law, we apply a de novo standard of review on appeal." (Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 316.)
Moreover, we must also keep in mind that, just as a book cannot be judged by its cover, a cause of action cannot be judged by the label given to it by plaintiff. This court has already expressly rejected the notion that "the mislabeling of the cause of action . . . . was fatal." (Thrifty-Tel, Inc. v. Bezenek (1996) 46 Cal.App.4th 1559, 1566.) Instead, the validity of a cause of action is tested by an analysis of the allegations contained therein — those allegations either state a valid claim, or they dont.
Consequently, "we are not limited to plaintiffs theory of recovery in testing the sufficiency of their complaint against a demurrer, but instead must determine if the factual allegations of the complaint are adequate to state a cause of action under any legal theory. The courts of this state have, of course, long since departed from holding a plaintiff strictly to the `form of action he has pleaded and instead have adopted the more flexible approach of examining the facts alleged to determine if a demurrer should be sustained." (Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 103.)
Thus, the issue before us is not merely whether we should "create" a new tort of "identity theft," but also whether the allegations comprising Phillips "identity theft" claim state a valid claim upon which relief can be granted under any theory existing in California law. We must conclude they do.
"The general rule is that `[f]or every wrong there is a remedy. (Civ. Code, § 3523.) In accordance with that principle, `[t]he violation of a statute gives to any person within the statutes protection a right of action to recover damages caused by its violation. (Palo Alto-Menlo Park Yellow Cab Co. v. Santa Clara County Transit Dist. (1976) 65 Cal.App.3d 121, 131; accord, County of Los Angeles v. City of Alhambra (1980) 27 Cal.3d 184, 195.) `Where a new right is created by statute, the party aggrieved by its violation is confined to the statutory remedy if one is provided [citation]; otherwise any appropriate common law remedy may be resorted to. (Palo Alto-Menlo Park Yellow Cab Co., supra, at p. 131.) A private right of action is an appropriate remedy when it is `"needed to assure the effectiveness of the provision . . . ." (Middlesex Ins. Co. v. Mann (1981) 124 Cal.App.3d 558, 570, quoting from Rest.2d Torts, § 874A.; but cf. Arriaga v. Loma Linda University (1992) 10 Cal.App.4th 1556, 1564 [questioning Middlesex].) Even when the statute expressly provides for criminal sanctions, damages may be available. (Montalvo v. Zamora (1970) 7 Cal.App.3d 69, 76.)" (Faria v. San Jacinto Unified School Dist. (1996) 50 Cal.App.4th 1939, 1947-1948.)
The pertinent statute in this case is Penal Code section 530.5, which criminalizes the unauthorized use of personal identifying information for unlawful purposes. Because that statute does not include any provision for civil damages, the general rule is that a victim of such conduct is relegated to common law remedies for the recovery of any damages suffered as a consequence of its violation. In this case, those remedies would include claims for conversion and intentional infliction of emotional distress.
Based in part upon Penal Code section 530.5, as well as statutory provisions in the civil law which specifically proscribe the type of conduct alleged here as "identity theft," California case law has already noted that an individuals "`personal identifying information . . . can be the object of theft"; that such a theft "can have serious consequences to that person," and that as a consequence, such misconduct would give rise to a claim against the perpetrator for damages. (CTC Real Estate Services v. Lepe (2006) 140 Cal.App.4th 856, 860-861.) As explained in Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, a cause of action for conversion may be stated for the theft of intangible personal property. "The basic elements of the tort are (1) the plaintiffs ownership or right to possession of personal property; (2) the defendants disposition of the property in a manner that is inconsistent with the plaintiffs property rights; and (3) resulting damages." ( Id. at p. 119; accord, A & M Records, Inc. v. Heilman (1977) 75 Cal.App.3d 554, 570.)
Moreover, to the extent that any such intentional misconduct rose to the level of "extreme and outrageous" it would also entitle the victim to recover damages for any resulting "severe emotional distress." (Unterberger v. Red Bull North America, Inc. (2008) 162 Cal.App.4th 414, 423.)
Of course, we cannot say, based upon the pleading alone, that Peters conduct in this case would necessarily rise to that "extreme and outrageous" level. Because the record before us on appeal excludes most of the reporters transcript from the trial, we can only speculate regarding the specific manner, and for what purposes, Peter used Philips identity without his permission. However, based upon the arguments made by Peter in the trial and on appeal, it seems there are various potential explanations for what occurred, including that (a) Peter did not undertake any financial transactions in Phillips name, and all the issues Phillip complains of were a consequence of "computer technology mix-ups, hacking, database structural errors and information management problems rampant in contemporary information handling"; (b) that Peter simply added Phillips name as a beneficiary on his own bank and brokerage accounts, for estate planning purposes; and (c) that Peter added Phillips name to his own credit cards, to establish a false "credit rating" which could then be relied upon by Phillip to obtain credit for which he would otherwise not be eligible.
We simply have no idea what Peter actually did — or for what reasons he did it — and thus no basis to opine whether those acts rose to the level of "extreme and outrageous" conduct which might justify an award of damages for any resulting "serious emotional distress" suffered by Phillip or, for that matter, misconduct of any kind. We leave those issues to be explored in a subsequent trial on the claim. It is sufficient for us to conclude that the claim is one on which a trial should have been allowed.
In short, what Phillip alleged, under the label of "identity theft," was simply an amalgam of a claim for conversion and intentional infliction of emotional distress: i.e., defendant utilized Phillips personal identity for his own purposes, without Phillips knowledge or permission (in other words, that he stole it); that he made use of that information in a manner which was "despicable and should not be tolerated in a civil society"; and that the conduct caused both economic damages and serious emotional distress to Phillip. Those allegations were sufficient to survive demurrer, and the court erred in concluding otherwise simply because the allegations had been lumped together under the new label of identity theft. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967, ["[I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory."])
II
Peter argues that even assuming the allegations contained in Phillips "identity theft" claim theoretically added up to a cause of action, he is nonetheless entitled to prevail, for various reasons. First, Peter asserts that we should disregard Phillips allegation that he had committed acts encompassed by Penal Code section 530.5(a), because if there had been "any merit whatsoever" to that allegation he "would have already been incarcerated, indicted or awaiting trial." He then suggests that because "[n]o other person or agency had any belief, indication, desire or inclination to investigate [his] actions," those actions simply could not have added up to the misconduct alleged. That argument is not persuasive.
Just because Peter has not been charged or convicted of a crime, does not mean he did not engage in acts constituting such a crime. Moreover, for purposes of assessing Phillips pleading, we must assume those factual allegations are true. (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th 962, 967.) Of course, whether Peter actually committed acts proscribed by Penal Code section 530.5(a) would be a matter of proof at trial.
And the fact that Phillip might not have adequately supported those allegations during the first trial in this case is of no moment. Because the court sustained Peters demurrer to the identity theft claim, finding it legally unsupported, Phillip had no occasion, let alone any obligation, to substantiate those specific allegations with evidence at trial.
Peter also asserts that, despite the sustaining of his demurrer to the identity theft claim, that claim actually was adjudicated as part of the trial on Phillips invasion of privacy claim. Peter then asserts that because he prevailed on that claim, Phillip is barred by principles of res judicata from "retrying" the identity theft claim. Again, we cannot agree.
Setting aside the purely technical problem that res judicata applies only to attempts to relitigate issues adjudicated to final judgment in a prior case — not, as here, within the same case after reversal of the judgment on appeal (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 897; Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 531; People v. Scott (2000) 85 Cal.App.4th 905, 919) — the fact of the matter is that Peter lost the only issue adjudicated which was relevant to the identity theft cause of action. Specifically, as Peter himself points out, the jury returned a special verdict in which it concluded, unanimously, that he had used Phillips identity without permission. The fact that the jury went on to make an additional finding that Peter did not "gain some advantage" by doing so — which was apparently deemed relevant in the context of the invasion of privacy cause of action — would in no way suffice to foreclose an action for damages based upon that identity theft.
What the jury did not decide, because the special verdict form instructed it not to, was whether Peters unauthorized use of Phillips identity had caused harm to Phillip. It is that claim which has yet to be tried.
Peter also argues that Phillips attempt to plead a cause of action based on identity theft was factually insufficient, as it contained no express assertion that Peter had acted "unlawfully," which is part of the crime of identity theft outlined in Penal Code section 530.5. Once again we are unpersuaded. What Phillip alleged is that Peter opened credit accounts, filed tax returns, and participated in litigation — all under Phillips identity, and without Phillips knowledge, let alone his permission. Those allegations describe unlawful conduct, and thus obviate any need to expressly state the conclusory allegation. In fact, had Peter simply alleged that conclusion of law, we would have been constrained to ignore it for purposes of assessing the merits of his pleading. (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th 962, 967, ["The court does not . . . assume the truth of contentions, deductions or conclusions of law."].)
Peter also suggests, by alluding to various arguments he made before the trial court, that his conduct could not have qualified as "unlawful" in any event, because, as a parent, he had the right to undertake certain financial transactions, and carry out certain decisions, on behalf of his minor child. We need not address that contention, however, because what Phillip alleged in this case was not confined to Peters conduct during his minority. Phillip specifically alleged that he reached the age of majority in July of 2002, and only thereafter discovered he had extensive credit and bank accounts existing in his name; that tax returns had been filed in his name for the years 2002 and 2003 — after he had become an adult — and that he was currently listed as the lead shareholder in a class action lawsuit. Given those allegations of acts taken after Phillip reached adulthood, Peter cannot simply defeat the cause of action by asserting he had the legal right to engage in transactions on behalf of his minor child.
In fact, Peters status as Phillips father illustrates why he might have been able to prevail on an "invasion of privacy" claim, while remaining potentially liable for the pointed assertion that he unlawfully used Phillips personal information to conduct financial transactions — i.e., the alleged "identity theft." As Phillips parent, Peter would necessarily have acquired significant knowledge of Phillips "personal indentifying information" by legitimate means, and thus it is arguable that Peter simply had no protectable expectation of privacy in that information vis-à-vis Peter. "[A] person generally has no right to maintain an action for improper intrusion against a relative or close friend for voluntarily disclosing personal information about him or her to another. . . . . `There are degrees and nuances to societal recognition of our expectations of privacy: the fact that the privacy one expects in a given setting is not complete or absolute does not render the expectation unreasonable as a matter of law." (Taus v. Loftus (2007) 40 Cal.4th 683, 731-732.)
But of course, that in no way suggests that Phillip did not have a legally protectable interest in preventing his father from utilizing that same information as the means to transact business under Phillips name, or as a means of creating a fraudulent financial profile for him.
The judgment is reversed, and the case remanded for further proceedings on Phillips claim that Peter caused him financial and emotional harm by engaging in unauthorized financial and legal transactions in his name and under his social security number. Phillip is to recover his costs on appeal.
WE CONCUR:
ARONSON, J.
IKOLA, J.