Berger v. Varum

248 Cal. Rptr. 3d 51, 35 Cal. App. 5th 1013
CourtCalifornia Court of Appeal, 5th District
DecidedMay 31, 2019
DocketA150629
StatusPublished
Cited by30 cases

This text of 248 Cal. Rptr. 3d 51 (Berger v. Varum) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Berger v. Varum, 248 Cal. Rptr. 3d 51, 35 Cal. App. 5th 1013 (Cal. Ct. App. 2019).

Opinion

Margulies, J.

*1016Plaintiff Arkady Berger sought to collect an underlying judgment against defendant Gary Varum and his company, defendant Telesis Engineers, Inc. (jointly the Varum defendants). Berger alleged the Varum defendants fraudulently transferred assets to other defendants in an effort to avoid paying the judgment. While Berger's enforcement action against the Varum defendants and defendants Alex Varum, Charles Thiel, Irina Varum, Natalie Kreigel, 1122 University Avenue, LLC, 1122 University, LLC, Gia Group, LLC, California Family Company, LLC, California Family, LLC, CWR Holdings, LLC, Bay Area Family Company, LLC, and Bay Area Family, LLC (jointly defendants) was pending, the Varum defendants paid the outstanding judgment. However, Berger amended his complaint to assert various consequential damages caused by the Varum defendants' delay in payment. Defendants subsequently filed a demurrer alleging Berger was not entitled to recover damages above the amount of the judgment and his enforcement costs, which the trial court granted.

Berger now appeals from the trial court's judgment following its order sustaining, without leave to amend, defendants' demurrer. Berger contends his complaint asserts a common law fraudulent transfer claim, which gives rise to consequential and punitive damages. We agree and reverse the trial court's order and subsequent judgment.1

*1017I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Underlying Action

Berger hired the Varum defendants to design and provide technical support for constructing a building in San *54Francisco.2 Significant problems with the Varum defendants' design emerged during demolition and construction, which resulted in Berger having to purchase an adjacent property. In 2013, Berger obtained an approximate $ 2.7 million judgment against the Varum defendants resulting from a prior lawsuit between the parties. The Varum defendants subsequently appealed but did not post a bond staying enforcement of the judgment.

While that appeal was pending, Berger filed a complaint against defendants for action on judgment, return of distributions to shareholders of or investors in judgment debtor, and fraudulent transfer. The complaint alleged various defendants received distributions of money, property, interests in real estate, and other items of value from the Varum defendants without paying adequate consideration. The complaint sought enforcement of the judgment, various relief from the fraudulent transfers, costs, exemplary damages, and other unspecified relief.

In 2015, this court affirmed the judgment. ( Berger I , supra , A141112.) Approximately seven months later, the Varum defendants paid the judgment, and Berger filed an acknowledgement of satisfaction of judgment.

Berger subsequently filed a second amended complaint (complaint) modifying the causes of action in light of the Varum defendants' satisfaction of judgment. That complaint asserted two causes of action against defendants for fraudulent conveyance pursuant to Civil Code section 3439 and conspiracy to defraud. Between entry of judgment and satisfaction of judgment, the complaint asserts the Varum defendants utilized various mechanisms to hide the amount and ownership of their assets and their financial condition, such as through corporate entities, asset purchase agreements, conveyances, and asset transfers without consideration. Specifically, the complaint alleges the Varum defendants distributed money, accounts, property, interests in real estate, and other items of value to various individuals and entities without requiring them to pay adequate consideration. The complaint asserts the Varum defendants took these actions to intentionally "hinder, delay or defraud" Berger from collecting payment on the judgment. The complaint further alleges the individuals and entities to whom these assets were *1018distributed "knowingly acted in concert with [the Varum defendants] to effect the fraudulent transfers" and conspired to hide these assets to obstruct Berger's efforts to collect on the judgment. As a result of this conduct, Berger asserts he incurred consequential damages and suffered emotional distress.

Defendants demurred to the complaint. They asserted the satisfaction of judgment made Berger whole, and Berger was not entitled to recover damages above the amount of the judgment and his enforcement costs. The trial court sustained defendants' demurrer without leave to amend. It concluded Berger could not pursue his fraudulent transfer claim because Berger "cites no published authority, and the court is aware of none, that permits a judgment creditor to seek consequential and/or punitive damages resulting from the delay in payment of a judgment due to fraudulent transfers that occurred prior to satisfaction of the judgment. Although [Berger] contends that he is entitled to seek 'regular fraud damages,' he has not alleged, nor has he shown that he can *55allege a 'regular fraud' claim." Berger timely appealed.

II. DISCUSSION

A. Standard of Review

We independently review a trial court's order sustaining a demurrer. ( Brown v. Deutsche Bank National Trust Co. (2016) 247 Cal.App.4th 275, 279, 201 Cal.Rptr.3d 892 ( Brown ).) "In doing so, this court's only task is to determine whether the complaint states a cause of action. [Citation.] We accept as true all well-pleaded allegations in the operative complaint, and we will reverse the trial court's order of dismissal if the factual allegations state a cause of action on any available legal theory. [Citation.] We treat defendants' demurrer as admitting all properly pleaded material facts, but not contentions, deductions, or conclusions of fact or law." ( Ibid. ) " 'We also consider matters which may be judicially noticed.' [Citation.] ... [and] give the complaint a reasonable interpretation, reading it as a whole and its parts in their context." ( Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.)

When " 'the trial court sustains a demurrer without leave to amend, we review the determination that no amendment could cure the defect in the complaint for an abuse of discretion.

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Cite This Page — Counsel Stack

Bluebook (online)
248 Cal. Rptr. 3d 51, 35 Cal. App. 5th 1013, Counsel Stack Legal Research, https://law.counselstack.com/opinion/berger-v-varum-calctapp5d-2019.