TipTop Restoration v. Zokaeem CA2/1 ( 2022 )

Filed 8/31/22 TipTop Restoration v. Zokaeem CA2/1
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California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
TIPTOP RESTORATION, INC., B312880
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. 19STCV12999)
v.
JOSHUA J. ZOKAEEM,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Barbara A. Meiers, Judge. Affirmed.
Rahel Goharchin Javaheri for Plaintiff and Appellant.
The Law Offices of Kevin Gerry and Kevin Gerry for
Defendant and Respondent.
_______________________
TipTop Restoration, Inc. (TipTop) appeals from a judgment
in favor of defendant attorney Joshua J. Zokaeem following the
trial court’s grant of Zokaeem’s motion for summary judgment.
In its opening brief on this appeal, TipTop states the issues
thus: “This [a]ppeal presents an issue of first impression
regarding whether a California attorney could be liable for
[c]onversion, [n]egligence and/or [b]reach of [f]iduciary [d]uty if
he receives insurance proceeds specifically earmarked for his
client’s vendor’s emergency services invoice and disburses the
proceeds to himself and his client without any payment to that
vendor. Also, there is no precedent regarding whether equity
requires creation of an equitable lien as to an ascertainable
amount of insurance proceeds, particularly designated by an
insurance carrier for a third-party vendor’s emergency services
that come into the possession and control of an attorney during
the processing of an insurance claim.”
TipTop contends that issues of material fact exist as to each
of the three causes of action against Zokaeem and whether an
equitable lien or constructive trust should be imposed on
Zokaeem.
For reasons discussed more fully below, we will affirm the
grant of summary judgment because (1) TipTop concedes that it
held no contractual or express lien; (2) the undisputed facts belie
the contention that the funds transmitted to the attorney were
“specifically earmarked” for TipTop, or otherwise represented an
“ascertainable amount” of funds as to which TipTop had a
property interest; and (3) TipTop has failed to demonstrate a
disputed issue of fact as to its relationship with Zokaeem that
would support imposing a fiduciary or other obligation of trust on
2
him that would have constrained him from handling the
insurance settlement proceeds as he did. Thus, we affirm.
BACKGROUND
A. Factual Summary
Bigan Banafshian, doing business as L.A. Bargain
(collectively, Banafshian), was a commercial tenant at a property
in Los Angeles, California, owned by Abraham Yadegaran, where
he operated a clothing business. In June 2017, the property and
Banafshian’s inventory sustained water damage.
Pursuant to a written agreement dated June 2, 2017,
TipTop provided emergency water damage dry-out and clean-up
services for Banafshian at the property. Under the “Emergency
Service Authorization Contract” (Emergency Contract), TipTop
represented it would bill Banafshian’s insurer as a courtesy.
Banafshian agreed that TipTop was authorized to act on
Banafshian’s behalf with the insurer and that he would hold any
check from the insurer in trust for TipTop’s benefit and give the
check to TipTop. Banafshian also agreed that ultimately, he was
responsible for payment to TipTop.
On July 21, 2017, Banafshian’s insurer, Hartford Casualty
Insurance Company (Hartford), advanced $50,000 to Banafshian.
The record does not disclose what precipitated this payment.
On September 11, 2017, TipTop sent to Banafshian a first
detailed invoice for remediating water damage, totaling
$11,198.71. On or about September 13, 2017, Banafshian
retained Zokaeem “to represent [him] with respect to [the] claim
[he] had tendered to [his] insurance carrier, Hartford.” On
September 27, 2017, Zokaeem forwarded TipTop’s September 11,
2017 invoice to a Hartford general adjuster, Wendy Cervantes.
3
According to the president of TipTop, Dan Reichman,
Zokaeem and Hartford “requested more information regarding
TipTop’s services.” Thus, on October 10, 2017, TipTop sent an
email to Cervantes, attaching, inter alia, documentation of labor
used to address the water damage, the Emergency Contract, and
a second invoice for $89,991.12. TipTop did not transmit this
information to the insurer through Zokaeem, and he was not
copied on this email. The record does not contain a separate
email or cover letter to Zokaeem attaching these documents or an
acknowledgement from Zokaeem that he received these
documents prior to TipTop filing a complaint.
On October 11, 2017, TipTop sent an invoice to Banafshian.
That invoice totaled $100,553.77, and appears, to some extent,
duplicative of the invoice that TipTop had sent to Hartford the
day before. After describing the September 11, 2017 and October
11, 2017 invoices in his declaration, Reichman averred he
“provided the invoices and supplemental information to both . . .
Hartford and . . . Zokaeem.”
More than a year later, in a letter from Hartford to
Zokaeem1 dated November 15, 2018, the insurer communicated
its resolution of Banafshian’s claims. The letter stated that
Hartford “has been unsuccessful validating you client’s claim
presentation.” Hartford determined Banafshian lost inventory
valued $64,415.75 and that it could substantiate lost business
income only in the amount of $16,199. It also reviewed TipTop’s
1 The letter from Hartford was addressed to Zokaeem’s law
firm, but written to the attention of the public adjuster who
provided some information to Hartford on Banafshian’s behalf
relating to inventory loss.
4
invoice for $100,553.77, and was “able to validate $74,529.37.”
The Hartford letter attached a spreadsheet entitled
“STATEMENT OF LOSS.” One row listed “Tip Top Restoration
pack out 5 day” and indicated under the columns for “RCV loss”
and “ACV loss” the amount of $74,529.37.
The Hartford letter concluded the total “[b]usiness
[p]ersonal [p]roperty claim came to $138,945.12.” After deducting
a $1,000 policy deductible and Hartford’s “previous claim advance
of $50,000,” Hartford determined a balance of $87,945.12 was
due. Accordingly, Hartford stated it would send two checks
under separate cover: a check for $87,945.12 and a check for
$16,199. Hartford also observed they would not issue $11,198.71
for emergency water mitigation as described in TipTop’s first
invoice because there was no contractual obligation in
Banafshian’s “lease to complete the water mitigation, or the
removal of permanently installed structural finishes.” Hartford
did not name TipTop on any of the checks or provide any notice
that TipTop was a lienholder. Zokaeem “promptly forwarded” the
payment to his client. However, in his memorandum of points
and authorities in support of a demurrer, Zokaeem also stated
that he had taken his “fees and distributed funds to [the]
defendants.”
TipTop’s Reichman contends in October and November
2018, he and Zokaeem had six to 10 telephone conversations, and
Zokaeem “repeatedly said he is working on resolving the claim
and getting TipTop paid. He . . . also state[d] that he represents
the owners of L.A. Bargain and can’t share information, but he
understands that TipTop needs to get paid from the insurance
benefits.”
5
On November 27, 2018, Zokaeem sent an email to TipTop,
stating, “Please forward your itemized bill. Everyone has to keep
in mind the situation here so we can come up with a fair
resolution to this. The client is obviously destitute at this point,
has not worked since the date of incident, has zero income . . . .
He is older, can barely speak English, and his life is in shambles.
[¶] Let’s come up with a resolution.” Reichman viewed this
email as Zokaeem attempting “to get [TipTop] to lower [its] bills.”
According to TipTop’s first amended complaint, on
November 28, 2018, TipTop sent a third invoice to Banafshian.
The invoice totaled $217,182.60, which was for continually
accruing storage costs for Banafshian’s inventory and furniture.
On November 29, 2018, TipTop sent an email to Zokaeem
stating, “[w]e have reports from . . . the insurance and we know
that our invoices were paid. We demand that you disclose with
us all insurance payment to date. [¶] In addition, there is still a
lot of personal property of your insured at our storage . . . . We
tried to communicate with you, leaving voice mails and never
received a call back. Not from you, not from the client. [¶]
Attached are all invoices owed to TipTop up to date. The total
amount is $333,528.00 not including delinquency charges and
interest . . . . [¶] Please let me know when should we receive all
insurance related documents.”
On December 11, 2018, TipTop again emailed Zokaeem:
“We are trying to work with you and your client on this file but so
far we don’t see any progress. [¶] Can you tell me please if the
claim was approved and let me speak directly with the carrier to
support our charges.” “I . . . never got the opportunity to support
my charges after the claim got approve[d].” Zokaeem responded,
“Unfortunately they were not going to take anything into
6
consideration. We are all on the same page in that we wish there
was more money to go around but the reality is that there isn’t.”
TipTop then asked, “Did they confirm that the claim is covered
but they are just arguing the amount that needs to be paid?”
Zokaeem responded, “Attached is [the] letter from Hartford . . . .
[¶] The total check for [business personal property] is
$87,945.12.”
On April 13, 2019, counsel for TipTop sent an email to
Zokaeem with the subject line “TipTop Restoration Inc. v. L.A.
Bargain, et al.” to inquire about the “[w]hereabouts of the
$74,529.37.” Zokaeem responded, “I am in receipt of your letter
and provided the info to my former client. I tried to reach you
but got voicemail. I understand [Banafshian] and his partner
had contact with Tip[T]op and you are free to call him directly to
work this out. This has nothing to do with me or my firm.
Tip[T]op did not have a lien and back when I spoke with Omri
[TipTop’s supervisor for the L.A. Bargain project], he told me he
will deal with the client and insurance company directly. He
knew I was closing the file on my end and said that his company
has had to deal with this in the past and that he would take care
of it. . . .”
B. Procedural Summary
On April 15, 2019, TipTop initiated this lawsuit, and on
August 19, 2019, filed a first amended complaint. TipTop sought
recovery for breach of contract, account stated, and services
rendered against Banafshian and quantum meruit against
Banafshian and property owner Yadegaran. TipTop alleged it
spoke with Banafshian “various times for payment of its [i]nvoice
. . . [and Banafshian] complained he did not receive satisfaction
from the Hartford insurance claim and refused to pay [TipTop].”
7
(Underscoring omitted.) As to Zokaeem, TipTop alleged causes of
action for conversion, breach of fiduciary duty, and negligence. In
each of these claims against Zokaeem, TipTop alleged that it was
a lien holder. As against Zokaeem, TipTop sought compensatory
damages in the amount of $74,529.37 as well as punitive
damages.
On September 30, 2019, Zokaeem filed a demurrer and
motion to strike the first amended complaint. On October 24,
2019, following the hearing on Zokaeem’s demurrer and motion to
strike, the trial court issued a minute order striking references to
TipTop as a lien holder in the first amended complaint. TipTop
has not appealed from this order.
On October 22, 2020, Zokaeem filed a motion for summary
judgment on the bases that there was no lien agreement,
Zokaeem did not owe a fiduciary or other duty to TipTop, and
there was no evidence that TipTop had a right to possess the
funds from Hartford because, inter alia, a mere contractual right
of payment does not suffice to establish a claim for conversion. In
his declaration in support of motion, Zokaeem averred that
TipTop “never presented [him] with any proposed lien(s) from
[TipTop], and [TipTop] never provided [him] with a copy of any
contact [sic] they had with” Banafshian. Further, he was never
“put on notice by [TipTop] of any asserted lien(s) . . . regarding
[its] rights to future payments and/or recovery from [Banafshian]
and/or . . . Hartford.”
In its opposition, TipTop argued, inter alia, that “[w]hat is
clear by the evidence is that Zokaeem paid his client without first
paying the entity that the specified $74,529.37 was supposed to
go to.” TipTop acknowledged “there was admittedly no written
lien signed between the parties[, but] the facts . . . indicate” an
8
equitable lien and constructive trust.2 In responding to seven of
Zokaeem’s 14 undisputed facts, which ranged from whether
Zokaeem agreed to act as an escrow holder or undertook to act on
Zokaeem’s benefit or on its behalf, TipTop did not cite specific,
conflicting evidence, but instead claimed that “[a]n equitable lien
. . . was created . . . as . . . Zokaeem received insurance benefits
he knew belonged to . . . TipTop, which created a constructive
trust” and cited to the entirety of evidence it put forth in
opposition to the motion for summary judgment.
On January 8, 2021, the trial court heard Zokaeem’s
motion for summary judgment. The court indicated its tentative
was to grant the motion and observed it did not see any cases on
point “on all fours” submitted in opposition. It stated it would
“take [the matter] under submission. And . . . give . . . both
[parties] an opportunity to file some supplemental points and
authorit[ies] to give [the court] cases that are actually on point,
or [the court is] going to make the effort to find one [itself].”
Zokaeem objected, noting TipTop had over three months to
provide the court with appropriate legal authorities and
arguments. The court responded, “Now, you say it was [TipTop’s]
burden to find these cases and come in with [them]. I agree with
you, but I would still prefer not to [make the effort to find the
cases] if I can. So I’ve said I’m willing to do some additional work
myself. If I’m inclined to change this tentative, based on what
cases I may find, I would certainly give both sides a—an
2 TipTop observed that Zokaeem filed his motion for
summary judgment without conducting any discovery. However,
TipTop did not argue that it needed to conduct further discovery
pursuant to Code of Civil Procedure section 437c, subdivision (h)
before it could oppose the motion.
9
additional opportunity to address those new cases on a request
for . . . reconsideration . . . or just by an invitation for
supplemental briefing.”
On January 11, 2021, TipTop submitted supplemental
briefing in which it identified two cases to support its arguments
for equitable lien and conversion: Bank of India v. Weg and
Myers, P.C. (N.Y.App.Div. 1999) 257 A.D.2d 183 and McCafferty
v. Gilbank (1967) 249 Cal.App.2d 569. In the supplemental brief,
TipTop also raised for the first time the contention that Zokaeem
and TipTop entered into an agreement, purportedly evidenced by
Zokaeem’s November 27, 2018 and December 11, 2018 emails to
TipTop. Zokaeem filed written objections to the supplemental
brief as unauthorized. The trial court did not explicitly rule on
Zokaeem’s objections, but given the clarity of its earlier
statement that the matter was under submission, subject to the
court entertaining new citations to case law, it can be inferred
that the court considered only the newly cited cases.
On February 2, 2021, the trial court granted Zokaeem’s
motion for summary judgment. It found, “there is no issue of
material fact before the court that would preclude a judgment for
this defendant as a matter of law. Contrary to [TipTop]’s
allegations, as a matter of law, the insurance proceeds paid to . . .
Zokaeem’s client were not [TipTop]’s moneys. It had no direct
claim to them as such, and this defendant had no contractual, or
equitable, or fiduciary relationship existing or imposed upon him
to hold or provide to [TipTop] the insurance proceeds transmitted
to him by his client’s insurance company, even if some of those
proceeds were obtained from the insurance company based upon
invoices and other evidence from [TipTop] transmitted to it by
10
defendant Zokaeem reflecting work done by [TipTop] to repair
damages at the insured’s place of business.”
On March 1, 2021, the trial court held a bench trial relating
to the remaining defendants. At the conclusion of trial, the trial
court executed a judgment in favor of TipTop as to Banafshian,
but in Zokaeem’s favor with respect to TipTop’s claims against
him.
TipTop timely appealed the judgment as to Zokaeem.
DISCUSSION
A. Zokaeem’s Motion to Strike
On appeal, Zokaeem moves to strike from the appellate
record (1) TipTop’s January 11, 2021 supplemental brief, (2) the
March 1, 2021 reporter’s transcript of the trial against defendant
Banafshian, (3) documentary evidence presented at trial that was
not part of the record before the court at the time of the summary
judgment motion, and (4) references in TipTop’s briefs to
testimony and evidence provided during the March 1, 2021 trial.
The trial court did not expressly rule on Zokaeem’s
objections to the supplemental brief. By his motion to strike,
Zokaeem properly renews his objection, which we review de novo.
(Taylor v. Financial Casualty & Surety, Inc. (2021), 67
Cal.App.5th 966, 980.)
The record is clear that to the extent the trial court
permitted any supplemental briefing, it was to provide the trial
court with legal authorities on point. However, TipTop did not
limit the substance of its supplemental brief to legal argument.
Rather, it raised a new factual theory: that Zokaeem and TipTop
entered into an agreement. Doing so was improper. Courts have
routinely declined to consider new theories raised for the first
time in a reply brief, and the considerations of equity and judicial
11
economy that have guided courts to do so (see, e.g., Hibernia Sav.
and Loan Soc. v. Farnham (1908) 153 Cal. 578, 584; Simpson v.
The Kroger Corp. (2013) 219 Cal.App.4th 1352, 1370; Reichardt v.
Hoffman (1997) 52 Cal.App.4th 754, 766) apply with equal if not
greater force to a party raising a new theory in what is
essentially a surreply.
Turning to the trial transcript and evidence presented at
trial, “[i]t is well settled that in reviewing a summary judgment,
‘ “. . . the appellate court must consider only those facts before the
trial court, disregarding any new allegations on appeal.
[Citation.] Thus, possible theories that were not fully developed
or factually presented to the trial court cannot create a ‘triable
issue’ on appeal. [Citations.]” ’ [Citation.]” (Havstad v. Fidelity
National Title Ins. Co. (1997) 58 Cal.App.4th 654, 661.)
Accordingly, we grant Zokaeem’s motion to strike TipTop’s
January 11, 2021 supplemental brief, the March 1, 2021 trial
transcript, TipTop’s augmented record at pages 83 to 87, and any
reference to evidence and testimony from these two items in
TipTop’s opening brief at pages 8 to 9 and page 13.
B. Legal Standard and Standard of Review
A “motion for summary judgment shall be granted if all the
papers submitted show that there is no triable issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law. . . .” (Code Civ. Proc., § 437c, subd. (c).) A
defendant seeking summary judgment has met the “burden of
showing that a cause of action has no merit if the party has
shown that one or more elements of the cause of action . . . cannot
be established, or that there is a complete defense to the cause of
action.” (Id., subd. (p)(2).) Once the defendant has met that
burden, the burden shifts to the plaintiff “to show that a triable
12
issue of one or more material facts exists as to the cause of action
or a defense thereto.” (Ibid.)
We review the trial court’s summary judgment rulings de
novo. In doing so, we liberally construe the plaintiff’s evidentiary
submission while strictly scrutinizing the defendant’s own
showing, and resolve any evidentiary doubts or ambiguities in
the plaintiff’s favor. (Whitmire v. Ingersoll-Rand Co. (2010) 184
Cal.App.4th 1078, 1083, citing Weber v. John Crane, Inc. (2006)
143 Cal.App.4th 1433, 1438.)
“Although our review of a summary judgment is de novo, it
is limited to issues which have been adequately raised and
supported in plaintiff[’s] brief.” (Reyes v. Kosha (1998) 65
Cal.App.4th 451, 466, fn. 6; see Kim v. Sumitomo Bank (1993) 17
Cal.App.4th 974, 979 [“ ‘This court is not required to discuss or
consider points which are not argued or which are not supported
by citation to authorities or the record’ ”].)
TipTop argues issues of material fact precluded summary
judgment of its causes of action for conversion, breach of fiduciary
duty, and negligence. In connection with these causes of action,
TipTop argues the equities support the imposition of an equitable
lien or constructive trust. We address each argument below.
C. The Trial Court Properly Granted Summary
Judgment as to TipTop’s Claim for Conversion
“ ‘Conversion is the wrongful exercise of dominion over the
property of another. The elements of a conversion are the
plaintiff’s ownership or right to possession of the property at the
time of the conversion; the defendant’s conversion by a wrongful
act or disposition of property rights; and damages.’ ” (Farmers
Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 451.) “Money
can be the subject of an action for conversion if a specific sum
13
capable of identification is involved.” (Id. at p. 452.) “Neither
legal title nor absolute ownership of the property is necessary.
[Citation.] A party need only allege it is ‘entitled to immediate
possession at the time of conversion. [Citations.]’ [Citation.]
However, a mere contractual right of payment, without more, will
not suffice.” (Ibid., italics omitted, citing Imperial Valley L. Co. v.
Globe G. & M. Co. (1921) 187 Cal. 352, 353-354.)
Throughout the litigation and this appeal, TipTop argues it
was entitled to $74,529.37 from the Hartford check for
$87,945.12. In support of this argument, TipTop contends that
Hartford “clearly earmarked” $74,529.37 for TipTop.
TipTop did not identify disputed facts that support its
conclusion or demonstrate that TipTop was entitled to immediate
possession of those funds. TipTop had a contractual right to
payment from Banafshian. It is undisputed it did not have an
express lien securing its payment. Further, rather than
“earmark” the funds for TipTop, Hartford’s letter indicated only
that Banafshian’s coverable loss included $74,529.37 worth of
services performed by TipTop. But even that amount was
aggregated by the Hartford with Banafshian’s allowed claim for
inventory loss (which had nothing to do with TipTop’s services)
and then the allowed claims were reduced by the amounts of the
policy deductible and the advance payment. TipTop simply
cannot establish a property right or claim to a specific portion of
the resulting $87,945.12 check that the Hartford sent to
Zokaeem. It is also undisputed that, notwithstanding TipTop
14
having independently communicated with Cervantes of Hartford,
Hartford did not include TipTop as a payee on the check.3
TipTop does not cite to any authority in which a court has
found a third party has a right to immediately possess money an
attorney recovers in similar situation. Indeed, “as a general
matter, an attorney receiving payment of a judgment or
settlement on behalf of his or her client has no obligation to
satisfy the client’s debts out of that fund. . . . It is only when the
creditor has some property interest in the fund or a trust
relationship exists that such an obligation might arise.”
(Farmers Ins. Exchange v. Zerin, supra, 53 Cal.App.4th at
p. 459.)
TipTop refers us to McCafferty v. Gilbank, supra, 249
Cal.App.2d 569, but that matter is inapposite. There, a former
wife secured a judgment against her former husband in Ohio.
The husband’s California lawyer negotiated and drafted an
agreement between his client and the former wife by which the
husband agreed to pay, in full satisfaction of the Ohio judgment,
a sum equal to one-half of the net proceeds from an auto injury
action pending in California in which he was the plaintiff. (Id. at
pp. 571, 575.) The attorney did not dispute the characterization
of the transaction as an assignment of a portion of the proceeds of
the California action. (Id. at p. 576.) The California action
settled, and two drafts payable jointly to the husband and his
attorney were provided to the attorney. (Id. at pp. 573-574.) The
husband and the attorney took the proceeds, and neither made
payment to the former wife. (Id. at p. 574.)
3 Copies of the checks are not included in the appellate
record.
15
The Court of Appeal concluded that the former wife had
been given a property interest in the proceeds of the California
action, and that the attorney’s position “that he had an obligation
to turn the fund over to his client in spite of the agreement which
he himself had drafted,” was “a curious contention which [could
not] be sustained.” (McCafferty v. Gilbank, supra, 249
Cal.App.2d at p. 576.) Quoting General Exchange Ins.
Corporation v. Driscoll (1944) 315 Mass. 360 [52 N.E.2d 970,
973], the Court of Appeal observed, “ ‘ “There was nothing in the
defendant’s status as [an] attorney for [his client] . . . which made
it his duty to pay to his client money which he knew . . . belonged
to [the] plaintiff. [Citations.] . . . It was his duty to hold for the
plaintiff so much of the proceeds . . . as represented the plaintiff’s
known interest in it.” ’ ” (McCafferty, supra, at pp. 576-577; see
Weiss v. Marcus (1975) 51 Cal.App.3d 590 [concluding a claim for
conversion could be stated against an attorney who was aware of
an express lien between his client and his client’s former
attorney].)
Here, Zokaeem did not negotiate a settlement between his
client and TipTop, which would have given rise to a global
understanding that a specific sum or percentage of the proceeds
belonged to TipTop.4 Nor does TipTop argue that it had a
property interest—such as an express lien in or assignment of—
the insurance proceeds as a result of Banafshian’s debt.5
4
The record fails to demonstrate that Zokaeem received
the Emergency Contract.
5 TipTop also cites Bank of India v. Weg and Myers, P.C.,
supra, 257 A.D.2d 183. Of course, decisions of other jurisdictions
are not binding on this court. (See, e.g., T.H. v. Novartis
16
Instead, TipTop had only a contractual right to payment, which
binding precedent has established is insufficient to state a cause
of action for conversion. (See Imperial Valley L. Co. v. Globe G. &
M. Co., supra, 187 Cal. at pp. 353-354; accord, Farmers Ins.
Exchange v. Zerin, supra, 53 Cal.App.4th at p. 452.)
D. No Issue of Material Fact Exists as to TipTop’s
Breach of Fiduciary Duty Cause of Action
With respect to the fiduciary duty claim TipTop alleges
against Zokaeem, which is conceded to be novel, this case
resembles Wolf v. Superior Court (2003) 107 Cal.App.4th 25(Wolf),6 where our colleagues in Division Seven were called upon
to consider whether a complaint stated a cause of action for
breach of fiduciary duty, despite the fact that the plaintiff had
acknowledged that his pleading was “devoid of allegations
showing an agency, trust, joint venture, partnership or other
‘traditionally recognized’ fiduciary relationship.” (Id. at p. 30.)
As in the instant case, the plaintiff in Wolf pressed an issue of
“first impression.”
As in Wolf, it is instructive to start the analysis by
recognizing the essential features of a fiduciary relationship.
Between parties to a transaction, a fiduciary relationship exists
“ ‘ “wherein one of the parties is in duty bound to act with the
utmost good faith for the benefit of the other party. Such a
Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 175.) Moreover,
Bank of India is inapposite because the attorney was on notice
that the lender, Bank of India, had a security interest in all of the
attorney’s business client’s assets, including the insurance
proceeds at issue. (Bank of India, supra, at p. 188.)
6 Previously published at 106 Cal.App.4th 625.
17
relation ordinarily arises where a confidence is reposed by one
person in the integrity of another, and in such a relation the
party in whom the confidence is reposed, if he voluntarily accepts
or assumes to accept the confidence, can take no advantage from
his acts relating to the interest of the other party without the
latter’s knowledge or consent. . . .” ’ [Citations].” (Wolf, supra,
107 Cal.App.4th at p. 29.) There is inherent in each of the
traditionally recognized fiduciary relationships “the duty of
undivided loyalty the fiduciary owes to its beneficiary, imposing
on the fiduciary obligations far more stringent than those
required of ordinary contractors.”7 (Id. at p. 30.)
The court in Wolf applied these general principles and
rejected the plaintiff’s contention that his contractual rights as
creator of the Roger Rabbit character that Disney had acquired
and promoted “necessarily required [him] to repose ‘trust and
confidence’ in Disney to account for the revenues received, and
because such revenues and their sources are in the exclusive
knowledge and control of Disney, . . . the relationship is
‘confidential’ in nature and necessarily imposes a fiduciary duty
upon Disney, at least with respect to accounting to Wolf for the
gross revenues received.” (Wolf, supra, 107 Cal.App.4th at p. 31;
7 As did the court in Wolf, we find Justice Cardozo’s well-
cited observation on fiduciary duties to be apt: “ ‘Many forms of
conduct permissible in a workaday world for those acting at arm’s
length, are forbidden to those bound by fiduciary ties. A trustee
is held to something stricter than the morals of the market place.
Not honesty alone, but the punctilio of an honor the most
sensitive is then the standard of behavior.’ ” (Wolf, supra, 107
Cal.App.4th at p. 30, quoting Meinhard v. Salmon (1928) 249
N.Y. 458, 464 [164 N.E. 545, 546].)
18
Downey v. Humphreys (1951) 102 Cal.App.2d 323, 332 [for the
proposition that a debt is not a trust and does not create a
fiduciary relationship].)
Similarly, we conclude that TipTop’s expectation of
payment from the Hartford insurance proceeds to address
Banafshian’s contractual debt does not give rise to a fiduciary
relationship between TipTop and Zokaeem. TipTop never
retained Zokaeem, who at all times held himself out to be, and
was recognized to be, the attorney for Banafshian. TipTop did
not even rely upon Zokaeem as an intermediary for most of the
information that it sent to the Hartford. In pressing
Banafshian’s insurance claim, Zokaeem was representing his
client’s interest, a fact made particularly clear by the fact that
the insurance claims included amounts for damages incurred by
Banafshian wholly unrelated to the work performed by TipTop.
TipTop argues it can demonstrate a fiduciary relationship
with Zokaeem as a matter of law in three ways: (1) pursuant to
California disciplinary precedent; (2) because, it contends,
Zokaeem acted as an escrow holder of the $74,529.37; and
(3) pursuant to California Rules of Professional Conduct,
rule 1.15. We are not persuaded.
First, each of the three disciplinary opinions TipTop cites
for the proposition that an attorney holding funds for a non-client
has the same fiduciary duties in dealing with those funds as if an
attorney-client relationship existed is distinguishable.
Johnstone v. State Bar (1966) 64 Cal.2d 153 (Johnstone)
involved an attorney who represented an injured worker and was
aware of a lien in favor of the workman’s compensation insurer
against any recovery in the personal injury action. (Id. at
pp. 154-155.) The attorney asked the insurer “the extent of [the]
19
lien so he could take it into consideration in attempting to effect a
compromise with the tortfeasor.” (Id. at p. 157.) The tortfeasor
agreed to pay $3,000, and the attorney agreed to pay the insurer
$1,000 out of that sum. (Id. at p. 155.) The attorney received a
draft of $3,000 made payable to the attorney, his client, and the
insurer and obtained endorsements from his client and the
insurer before depositing the money in his trust account. (Ibid.)
He never provided the $1,000 to the insurer.
In Guzzetta v. State Bar (1987) 43 Cal.3d 962 (Guzzetta), an
attorney represented a husband in a dissolution action. After the
sale of a restaurant owned by the husband in which the wife
claimed an interest, the attorney, the husband, the wife, and the
wife’s attorney agreed that $7,630.92 in sale proceeds would be
deposited into the attorney’s trust account, and all four agreed
that the funds could be withdrawn only on court order or
stipulation of the parties. (Id. at p. 970, 971.) The attorney failed
to return the funds to the husband or his wife. (Id. at p. 970.)
The Supreme Court concluded, “the nature of the agreement
pursuant to which the proceeds from the sale of the restaurant
were deposited in [the attorney’s] trust account created a duty to
[the wife] as well as to [the attorney]’s client.” (Id. at p. 979,
italics added.)
In Hamilton v. State Bar (1979) 23 Cal.3d 868, the attorney
was charged with breach of fiduciary duty for failing to account
as the escrow officer for a small club that invested in second deeds
of trust. The club was established by the attorney’s client,
George Dorward, and another man, Harold Wright. (Id. at
pp. 876-877.) As part of the club’s activities, Wright wrote checks
to the attorney with instructions as to how to disburse the funds,
including the purchase of trust deeds approved by Dorward and
20
Wright. (Id. at p. 877.) Dorward, however, instructed his
attorney to “ ‘hand over blanket amounts’ ” of money bearing no
relation to the amounts for specific trust deed purchases. (Ibid.)
The attorney conceded that he believed all the money belonged to
Wright. (Ibid.) Later, Wright sought an accounting, which the
attorney failed to provide. (Id. at pp. 877-878.) Dorward later
pleaded guilty to grand theft. (Id. at p. 877.)
Here, TipTop does not dispute that there was no express
lien which (as in Johnstone) would have given TipTop a property
interest in the res to which the lien attached.8 Moreover, due to
the attorney’s involvement in brokering a settlement agreement
in Johnstone between his client and the insurer, there was a
global understanding, which included the lawyer, that a specific
sum was due to the insurer. The attorney did not have to
unilaterally determine the proper amount to give to the insurer,
which may have conflicted with his client’s wishes. The same is
not true here.
Further, the attorneys in Johnstone and Guzzetta directly
entered into clearly articulated agreements with the promisee,
thereby inducing the promisee to reasonably rely on an
expectation of the attorney’s truthfulness. (See Barbara A. v.
John G. (1983) 145 Cal.App.3d 369, 383 [“ ‘[a] member of the
State Bar should not under any circumstances attempt to deceive
another person’ ”].) Again, the same facts are not present here.
8 “ ‘A lien is a charge, imposed in some mode other than by
a transfer in trust, upon specific property, by which it is made
security for the performance of an act.’ ” (Weber v. McCleverty
(1906) 149 Cal. 316, 320, italics omitted.)
21
Prior to the filing of its (now-stricken) supplemental brief,
TipTop did not contend it entered into an agreement with
Zokaeem. TipTop also did not identify in its separate statement
in opposition to the motion its theory that Zokaeem agreed
TipTop would be paid from the insurance proceeds or facts
establishing such an agreement. At most, TipTop asserted only
that Zokaeem negotiated with TipTop concerning its bill. Thus,
TipTop may not now assert such an agreement existed. (See
Code Civ. Proc., § 437c, subd. (b)(3) [“The opposition papers shall
include a separate statement that responds to each of the
material facts contended by the moving party to be undisputed
. . . [and] shall set forth plainly and concisely any other material
facts the opposing party contends are disputed”]; Havstad v.
Fidelity National Title Ins. Co., supra, 58 Cal.App.4th at p. 661
[“ ‘ “possible theories that were not fully developed or factually
presented to the trial court cannot create a ‘triable issue’ on
appeal” ’ ”].)
Even if we entertained TipTop’s new theory, Zokaeem and
TipTop’s communications do not give rise to an agreement or
meeting of the minds. TipTop states it “understood from
Zokaeem that it would be paid from the insurance claim
proceeds” because during the months of October and November
2018, Reichman and Zokaeem “had [six to ]10 phone
conversations[,] and . . . Zokaeem repeatedly said he [was]
working on resolving the claim and getting TipTop paid.
[Zokaeem] would also state that he represents [Banafshian] and
can’t share information, but he understands that TipTop needs to
get paid from the insurance benefits.” Then, pointing to
Zokaeem’s November 27, 2018 email to TipTop, TipTop suggests
that Zokaeem confirmed a meeting of the minds that TipTop
22
would be paid from the insurance proceeds. In that email
Zokaeem stated, “Please forward your itemized bill. Everyone
has to keep in mind the situation here so we can come up with a
fair resolution to this. The client is obviously destitute at this
point . . . . [¶] Let’s come up with a resolution.”
The evidence reveals only that Zokaeem attempted to—but
was not able to—negotiate a resolution on his client’s behalf,
which is markedly different from Johnstone and Guzzetta.
Indeed, Reichman acknowledges no agreement was reached in
his declaration when referring to the November 27, 2018 email:
“Zokaeem was trying to get [TipTop] to lower [its] bills.”
Moreover, such negotiations are antithetical to a fiduciary
relationship between Zokaeem and TipTop. Further, that
Zokaeem sought to obtain TipTop’s invoices, itemized bills, and
other information do not establish that he was acting on TipTop’s
behalf; rather, such information was necessary for Hartford to
process his client’s insurance claim. Evidencing this
understanding, and in keeping with the language in the
Emergency Contract authorizing TipTop to pursue
reimbursement directly from Banafshian’s insurance, TipTop
forwarded some documentation directly to Cervantes of Hartford
without copying Zokaeem.
TipTop’s contention that there was a meeting of the minds
also fails because there is no evidence that TipTop and Zokaeem
reached an understanding about how Zokaeem was to be
compensated for his efforts in prosecuting the insurance claim
between September 2017 and October 2018. TipTop’s position
seems to be that Zokaeem was to be uncompensated because all
of the funds that Hartford identified as related to the covered
services TipTop provided should have been paid to it. In the
23
absence of such evidence, there is no dispute that Zokaeem was
counsel to Banafshian and that he was prosecuting his client’s
insurance claims. He did not undertake to act on behalf of
TipTop.
Zokaeem also did not act as an escrow agent as in Hamilton
v. State Bar, supra, 23 Cal.3d 868. On appeal, TipTop contends
Zokaeem “essentially acted as an escrow holder.” Yet, he did not
cite evidence to dispute Zokaeem’s contention in his separate
statement that he “never agreed to act as [an] escrow or
stakeholder for [TipTop].” Instead, TipTop disputed Zokaeem’s
contention only on the basis that “[a]n equitable lien was
created.”
Indeed, the transaction at issue lacked fundamental
hallmarks of an escrow agency. “ ‘An escrow involves the deposit
of documents and/or money with a third party to be delivered on
the occurrence of some condition.’ [Citations.] An escrow holder
is an agent and fiduciary of the parties to the escrow. [Citations.]
The agency created by the escrow is limited—limited to the
obligation of the escrow holder to carry out the instructions of
each of the parties to the escrow. [Citations.]” (Summit
Financial Holdings, Ltd. v. Continental Lawyers Title Co. (2002)
27 Cal.4th 705, 711; see Claussen v. First American Title
Guaranty Co. (1986) 186 Cal.App.3d 429, 435 [“an escrow holder
is an agent for all parties who are exchanging instruments and
payments through an escrow”].)
Zokaeem did not receive funds directly from TipTop that he
was charged with holding as he awaited an exchange or the
occurrence of a condition. And the parties did not provide him
with instructions, which would have defined the scope of his
obligations. (Axley v. Transamerica Title Ins. Co. (1978) 88
24
Cal.App.3d 1, 9 [“ ‘[I]t is generally held that no liability attaches
to the escrow holder for his failure to do something not required
by the terms of the escrow or for a loss incurred while obediently
following his escrow instructions’ ”]; accord, Romo v. Stewart Title
of California (1995) 35 Cal.App.4th 1609, 1618, fn. 9 [obligation
of escrow holder limited to faithful compliance with instructions
from the principal].)9
TipTop next argues that an issue of material fact exists
whether Zokaeem complied with California Rules of Professional
Conduct, rule 1.15(d)(7), which states that a lawyer shall
“promptly distribute, as requested by the client or other person,*
any undisputed funds or property in the possession of the lawyer
9 TipTop cites Wasmann v. Seidenberg (1988) 202
Cal.App.3d 752, 756-757, to support his argument that Zokaeem
owed it a fiduciary duty as an escrow agent. In that case, a wife’s
attorney and a husband’s attorney sought to formalize the terms
of a property division under which the husband would convey his
interest in the couples’ residence in exchange for $70,000. After
counsel conferred many times, the husband’s attorney sent to the
wife’s attorney a final draft of the settlement agreement and a
grant deed, both of which were executed by the husband, as well
as written instructions that the wife’s attorney was authorized to
record the deed only upon obtaining $70,000 for the husband.
The wife’s attorney accepted the grant deed and provided it to his
client, who recorded the deed without providing $70,000 to her
former husband. The Court of Appeal found wife’s attorney did
not owe a professional duty to the husband, but did owe a
fiduciary duty to the husband as an escrow agent.
As observed above, here, there was no property exchange;
TipTop did not directly entrust funds to Zokaeem’s care; nor has
TipTop demonstrated $74,529.37 of the insurance proceeds was
its property.
25
or law firm* that the client or other person* is entitled to
receive.”10 (Rules of Prof. Conduct, rule 1.15(d)(7), italics added.)
TipTop suggests TipTop violated the rule because he disbursed
funds that were disputed. TipTop has not provided any citation
to legal authorities demonstrating that rule 1.15 prohibits the
distribution of funds to the client in the event that the owner of
the funds is disputed.11 (Rules Prof. Conduct, rule 1.15.)
Without such authority, we decline to read rule 1.15 in this
manner. TipTop also does not cite to any authorities or provide
cogent argument as to how the distribution of disputed funds
would give rise to a fiduciary duty. Finally, as described above,
10 The asterisks indicate defined terminology under rule
1.0.1 of the Rules of Professional Conduct. “ ‘Person’ has the
meaning stated in Evidence Code section 175.” (Id., rule
1.0.1(g)(1).)
11 To the extent TipTop sought to enforce rule 1.15 of the
Rules of Professional Conduct such that it received the funds
from the Hartford checks, TipTop fails to first address whether it
qualifies as an “other person” under the rule. Rule 1.15(a)
suggests the duties under the rule are triggered when “funds
[are] received or held by a lawyer or law firm* for the benefit of a
client, or other person* to whom the lawyer owes a contractual,
statutory, or other legal duty . . . .” (Italics added.) A comment to
rule 1.15(a) states: “Whether a lawyer owes a contractual,
statutory or other legal duty under paragraph (a) to hold funds
on behalf of a person* other than a client in situations where
client funds are subject to a third-party lien will depend on the
relationship between the lawyer and the third-party, whether the
lawyer has assumed a contractual obligation to the third person*
and whether the lawyer has an independent obligation to honor
the lien under a statute or other law.” (Id., rule 1.15, com. (1).)
26
TipTop also has not shown that it has a property interest in or
right to possess the funds.
Woven throughout TipTop’s arguments is the notion that
Zokaeem breached fiduciary obligations to it, because, it
contends, the facts give rise to an equitable lien and constructive
trust. Indeed, in response to Zokaeem’s undisputed facts
concerning Zokaeem acting as an escrow holder or for the benefit
or on behalf of TipTop, TipTop responds only that an equitable
lien and constructive trust were created. TipTop’s post hoc
argument is circular. “Before a constructive trust can be
imposed, the plaintiff must prove that the defendant’s acquisition
of the property was wrongful.” (PCO, Inc. v. Christensen, Miller,
Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150
Cal.App.4th 384, 398.) Similarly, an equitable lien is imposed
out of general considerations of right and justice. (See Farmers
Ins. Exchange v. Zerin, supra, 53 Cal.App.4th at p. 453.)
Equitable liens and constructive trusts are remedies to address
inequitable conduct. They do not independently give rise to a
substantive claim for a breach of fiduciary duty. (See PCO, Inc,
supra, at p. 398 [observing that, otherwise, “a separate,
actionable breach of fiduciary duty occurs in any case involving
an alleged conversion”].)
In sum, we conclude the trial court did not err in granting
Zokaeem’s motion for summary judgment as to TipTop’s breach of
fiduciary duty cause of action.
E. The Trial Court Did Not Err in Granting Summary
Judgment as to TipTop’s Negligence Cause of Action
TipTop argues there is a triable issue of material fact as to
whether Zokaeem breached “a duty to pay TipTop money he had
notice belonged to TipTop,” and argues a constructive trust
27
should be imposed. (Italics omitted.) As discussed above in
addressing TipTop’s conversion claim, however, TipTop has not
submitted evidence that creates a triable issue of material fact
that the funds belonged to TipTop or that TipTop had a right to
them vis-à-vis Zokaeem.
F. Neither Remedy of an Equitable Lien or a
Constructive Trust is Available to TipTop
TipTop argues that in connection with its claims for
conversion and breach of fiduciary duty, the equities favored the
imposition of an equitable lien. Similarly, TipTop argues a
constructive trust should be created generally and in connection
with its claims for breach of fiduciary duty and negligence.
Both a constructive trust and equitable lien are equitable
remedies dependent upon a substantive basis for liability. (See
PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil &
Shapiro, LLP, supra, 150 Cal.App.4th at p. 398 [“A constructive
trust, however, is an equitable remedy, not a substantive claim
for relief”]; Glue-Fold, Inc. v. Slautterback Corp. (2000) 82
Cal.App.4th 1018, 1023, fn. 3 [“Because both of these equitable
forms of remedies are dependent upon a substantive basis for
liability, they have no separate viability if all of [the plaintiff’s]
other causes of action are time-barred”]; Farmers Ins. Exchange
v. Smith (1999) 71 Cal.App.4th 660, 667 [“An equitable lien is,
after all, merely an equitable remedy”].) Thus, because the trial
court properly granted summary judgment as to each cause of
action against Zokaeem, neither a constructive trust or equitable
lien is available to compel Zokaeem to pay monies to TipTop.
Nevertheless, TipTop has not demonstrated a dispute of
material fact that it would have been entitled to either remedy.
28
“An equitable lien is a right to subject property not in the
possession of the lienor to the payment of a debt as a charge
against that property. [Citation.] It may arise from a contract
which reveals an intent to charge particular property with a debt
or ‘out of general considerations of right and justice as applied to
the relations of the parties and the circumstances of their
dealings.’ [Citation.]” (Farmers Ins. Exchange v. Zerin, supra, 53
Cal.App.4th at p. 453.)
“A promise to pay a debt out of a particular fund, without
more, will not create an equitable lien on that fund.” (Farmers
Ins. Exchange v. Zerin, supra, 53 Cal.App.4th at p. 454.)
However, a “promise to pay from a specific fund may suffice to
create an equitable lien if considerations of detrimental reliance
or unjust enrichment are implicated.” (Id. at p. 455.)
“ ‘A constructive trust is an equitable remedy to compel a
person who has property to which he is not justly entitled to
transfer it to the person entitled thereto. [Citations.]’ [Citation.]
. . . ‘[A] constructive trust may be imposed in practically any case
where there is a wrongful acquisition or detention of property to
which another is entitled.’ [Citation.]” (Farmers Ins. Exchange v.
Zerin, supra, 53 Cal.App.4th at p. 457, italics omitted.)
TipTop claims Zokaeem was unjustly enriched “by taking
his fee from money designated for TipTop’s services.” However,
“there is no question that the attorney gains no unjust
enrichment by simply turning over to his or her client what the
agreement with the client requires: the balance of the proceeds of
the litigation after legal fees and costs.” (Farmer’s Ins. Exchange
v. Smith, supra, 71 Cal.App.4th at p. 670.) Accordingly, we
cannot say there is any dispute of material fact that Zokaeem’s
29
taking of his fees out of the Hartford proceeds unjustly enriched
him.12
Moreover, as we addressed above, TipTop has not set forth
any evidence or argument supporting its theory that it was
entitled to the Hartford funds from Zokaeem.
Further, in the absence of evidence of a property interest in
the Hartford monies or a trust relationship with Zokaeem, we
agree with Farmers Ins. Exchange v. Smith, supra, 71
Cal.App.4th 660 that pressing Zokaeem to act as a collection
agent on TipTop’s behalf, without recompense from TipTop and
in potential conflict with his client’s wishes, is not equitable. (Id.
at pp. 662, 670-671, 672.)
Thus, we conclude the equities do not favor the creation of
an equitable lien or constructive trust in this matter.
12 TipTop does not develop any argument as to which claim
between the two of them should have priority. (See Gilman v.
Dalby (2009) 176 Cal.App.4th 606 [holding an attorney lien for
costs had priority over an earlier medical lien].)
TipTop contends it “reasonably relied on getting paid for its
services from the insurance proceeds.” However, it does not and
cannot claim that it relied on Zokaeem obtaining the proceeds on
its behalf at the time it provided the water damage remediation
to Banafshian as Banafshian did not hire Zokaeem until months
later. TipTop also does not argue it detrimentally relied on
Zokaeem procuring payment on its behalf thereafter or state facts
in its separate statement in opposition that support such a
theory. We observe that TipTop asserts in its opening brief that
if Zokaeem was not representing Banafshian, “said amount would
go directly to TipTop or Zokaeem’s client.” However, contention
is speculative; there is no evidence in the record that Hartford
would have paid the same amount regardless of Zokaeem’s
involvement.
30
DISPOSITION
We affirm the trial court’s judgment in favor of Zokaeem.
Each party is to bear their own costs on appeal.
NOT TO BE PUBLISHED
KELLEY, J.*
We concur:
ROTHSCHILD, P. J.
BENDIX, J.
* Judge of the Los Angeles County Superior Court, assigned
by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
31