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Central Concrete Supply Co., Inc. v. Bursak

March 11, 2010

CENTRAL CONCRETE SUPPLY CO., INC., PLAINTIFF AND RESPONDENT,
v.
MICHAEL BURSAK, DEFENDANT AND APPELLANT.



(San Mateo County Super. Ct. No. CIV 473469). Beth Labson Freeman, Judge.

The opinion of the court was delivered by: Simons, J.

CERTIFIED FOR PUBLICATION

Civil Code section 1714.10*fn1 places limitations on a party's right to sue an attorney for conspiring with his or her client. Subdivision (a) imposes a prefiling, court approval requirement on suits of that nature. Subdivision (b) provides that the failure to obtain the court approval required in subdivision (a) is a "defense" to the action. Subdivision (c) sets out two statutory exceptions to the prefiling requirement. Central Concrete Supply Co., Inc. (respondent) filed a complaint alleging that Michael Bursak (appellant), an attorney, conspired with his client to defraud respondent. Appellant successfully challenged the complaint on the basis that it failed to allege compliance with the prefiling requirement, or to allege an applicable statutory exception. Over appellant's objection, the court then granted respondent leave to amend the complaint to remedy the pleading defect(s). Appellant contends section 1714.10, subdivision (b), bars a trial court from granting leave to amend in these circumstances.*fn2 We disagree and affirm.

FACTS*fn3

In December 2003, respondent filed an action, Central Concrete Supply Co., Inc. v. Steffani et al. (Super. Ct. San Mateo County, 2008, No. 436249) (the underlying action), against its former employee, Steven Steffani (Steffani); Steffani's wife, Shauna Steffani; and others for damages resulting from an embezzlement scheme to defraud respondent. At the outset of that litigation, respondent sought and obtained a preliminary injunction barring Steffani, the other defendants and their "officers, agents, employees, representatives, and all persons acting in concert or participating with them," from selling, transferring and encumbering certain assets, including real property located on Bayport Court in San Carlos (the Property). The request for issuance of the preliminary injunction was resolved by stipulation.*fn4

At the December 2003 injunction hearing, Steffani was represented by appellant. In January 2004, appellant substituted out as Steffani's counsel. In June 2007, Steffani associated James Courshon and Nicholas Damer for the limited purpose of moving to dissolve the 2003 preliminary injunction. In October 2007, Damer withdrew as Steffani's counsel.

In late June 2007, Steffani filed a motion to dissolve the preliminary injunction, asserting that he required access to the equity in the Property. He did not disclose that the Property had been sold on May 31, 2006. In July, 2007, while preparing its opposition to the motion to dissolve, respondent first learned that Steffani had violated the preliminary injunction by surreptitiously selling the Property. All the defendants in the underlying action aided and conspired with Steffani to sell the Property in violation of the injunction. The trial court denied the motion to dissolve the injunction.

The defendants in the underlying action have obstructed respondent's efforts to trace the proceeds from the Property's sale. On October 4, 2007, Judge Mittlesteadt granted respondent's motion for an "Order to Aid in Enforcement of Preliminary Injunction." Steffani failed to comply with the enforcement order and falsely testified at a deposition that he turned over the sale proceeds to a fictitious person. Shaun Steffani refused to appear for her noticed deposition.

Documents subpoenaed by respondent from First American Title Company and Washington Mutual Bank revealed that on June 13, 2006, following the sale of the Property, the Steffanis deposited the sale proceeds of $527,887 in an account in Shaun Steffani's maiden name (maiden name account). Thereafter, Shaun Steffani began depleting the remaining proceeds in the maiden name account by writing a series of checks for "cash" in amounts less than $10,000, the threshold amount required for bank disclosure to federal authorities. In September 2006, she transferred a total of $287,000 from the maiden name account to appellant in three cashier's checks.

In addition, appellant refused to testify at his first deposition, invoking the attorney-client privilege. After respondent successfully moved to compel appellant's deposition testimony, appellant appeared at a second deposition and invoked his Fifth Amendment right against self-incrimination in response to all questions.

Rather than complying with the injunction and enforcement order, the Steffanis and appellant engaged in a pattern of actively concealing the proceeds of the Property sale, which the court had ordered to be interpleaded with the court. Appellant conspired with the Steffanis to effectuate the fraudulent transfers and continuing concealment of the illegal sale proceeds for their own use. Steffani transferred the proceeds from the sale to Shaun Steffani and to appellant through Shaun Steffani. Shaun Steffani and appellant "either continue to hold the proceeds, have made further fraudulent transfers and/or have utilized the funds for their own use."

PROCEDURAL HISTORY

In June 2008, respondent filed the instant complaint against appellant, Steffani and Shaun Steffani*fn5 alleging "fraudulent transfer (actual fraud)" (first cause of action), "fraudulent transfer (constructive fraud)" (second cause of action), "fraudulent transfer (constructive fraud-insolvency)" (third cause of action), civil conspiracy (fourth cause of action), conversion (fifth cause of action), accounting (sixth cause of action), unjust enrichment (seventh cause of action), constructive trust (eighth cause of action), "damages" (ninth cause of action), and "civil penalties for violation of court order" (tenth cause of action).

In October 2008, appellant demurred and filed a special motion to strike respondent's complaint pursuant to the anti-SLAPP*fn6 statute. (Code Civ. Proc., § 425.16.) Appellant also moved to strike the entire complaint pursuant to Code of Civil Procedure section 436,*fn7 on the grounds that the complaint was based on conduct protected by the litigation privilege (Civ. Code, ยง ...


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