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Cardinale v. Miller

California Court of Appeals, First District, Third Division

January 8, 2014

NOREEN CARDINALE, Plaintiff and Respondent,
v.
DANIEL R. MILLER, JR., et al., Defendants and Appellants. NOREEN CARDINALE, Plaintiff and Respondent,
v.
KEITH KNAPP et al., Defendants and Appellants.

CERTIFIED FOR PARTIAL PUBLICATION[*]

Trial Court Contra Costa County Superior Court No. MSC0800657 Hon. Judith S. Craddick Trial Judge

Counsel for Defendants and Appellants: Law Offices of Michel Heath: Michael T. Health Greines, Martin, Stein & Richland: Robin Meadow and Sheila A. Wirkus Rice & Bronitsky: Charles Bronitsky and Julia Wei

Counsel for Plaintiff and Respondent: Caron & Associates: Martha L. Caron Law Offices of Mary Margaret Bush: Mary M. Bush

Siggins, J.

Keith Knapp and his company Home Loan Service Corporation (CHL) tread a path to this court that is well-worn by their various codefendants in Noreen Cardinale’s long-fought action arising from an abusive loan scheme. (See Cardinale v. Miller (May 17, 2010, A125546) [nonpub. opn.] (Cardinale v. Miller 3); Cardinale v. Miller (Jan. 31, 2005, A100606 & A101914) [nonpub. opn.]; see also Cardinale v. Fitz-Stephens (May 28, 2002, A093851) [nonpub. opn.].) After a jury found Knapp and CHL[1] liable for conspiring to engage in fraudulent transfers to avoid enforcement of Cardinale’s judgments against Daniel Miller, Jr. (Miller), they contend the evidence is insufficient to support the judgment, the special verdict form was critically flawed, the jury’s findings are irreconcilably inconsistent, and there was no legal basis for an award of attorneys’ fees. In the unpublished portion of this opinion we conclude that, in most significant respects, these assertions have no merit. However, our review of the record confirms that a portion of the damage award lacks evidentiary support, and it must be reduced. Accordingly, we modify the damage award and affirm the judgment as modified. In the published portion of this opinion we affirm the award of attorneys’ fees.

BACKGROUND

Much of the history of this case is discussed in our prior opinions, and we will repeat only what is necessary to explain our disposition. In 2008, some 10 years after she first sued Miller and others for fraud and related torts, Cardinale sued Miller, Knapp, and various other individuals and entities to enforce the judgment she won against Miller in her fraud suit and a related bankruptcy action. Her complaint alleged that Miller, aided and abetted by other defendants, operated a “refinance Ponzi scheme” through which he shielded his assets from Cardinale’s attempts to collect on her judgments. The complaint alleged Miller did this by obtaining loans on properties he owns and controls through sham entities and family members, and converting the loan proceeds to his own personal use. He would then either force a discounted payoff of prior loans without recording a reconveyance, so that to his creditors the properties appeared to have no equity, or would simply allow the loans to default.

Cardinale alleged that Knapp and CHL salesperson Derald Kenoyer conspired in this scheme to drain the equity from Miller’s property by brokering at least 23 loans for Miller’s sham entities in exchange for highly remunerative brokerage commissions. Knapp “knew or should have known that Miller was the actual recipient of the loan proceeds, that the point of Miller and Kenoyer’s enterprise was to defraud Miller’s creditors, and that Miller had a dismal record of defaults and foreclosures. Knapp allegedly allowed Miller and Kenoyer’s activities to continue so he could reap e xtravagant commissions. The complaint alleged Knapp knew Kenoyer was arranging the loans without loan applications, reference to lending standards, or regard to the borrowers’ creditworthiness; that Knapp knew or should have known the borrowing entities were a sham; and that the loans were inadequately secured and being used to get money out of the secured properties. The complaint further allege[d] Knapp deliberately breached his duty to supervise and regulate Kenoyer because Kenoyer’s activities were extremely profitable.” (Cardinale v. Miller 3, supra, p. 3.)

The trial court sustained Knapp’s demurrer to Cardinale’s cause of action for conspiracy to commit fraudulent transfers, but this court held the complaint sufficiently stated a claim for fraudulent transfers against Miller and the related conspiracy claim against the broker defendants. (Id. at pp. 4-6.) In the meantime, Cardinale obtained a default judgment against Miller. After she prevailed on her appeal, Cardinale proceeded to a jury trial against the broker defendants and Daniel Miller, Sr. (Miller Senior). [2]

We will save most discussion of the evidence for our discussion of the discrete legal issues raised by this appeal. Suffice it to say that the jury found in favor of Cardinale on all issues. There were fraudulent transfers of property interests from Miller to other defendants; Miller controlled the entities that held title to the subject properties; and he fraudulently transferred his legal or equitable interest in one or more of those properties. On the conspiracy count, the broker defendants and Miller Senior were found to have conspired with or aided and abetted Miller “in stripping his equity in properties for the purpose of hindering, delaying or defrauding” Cardinale, and that their conduct was a substantial factor in causing her loss. The jury awarded compensatory damages of $2, 170, 593. In a second phase of trial on punitive damages, the jury added a punitive award of $900, 000, comprised of $300, 000 against Knapp individually, $500, 000 against CHL, and $100, 000 against Miller Senior. Cardinale was also awarded $293, 937.50 in attorneys’ fees.

This appeal timely followed.

DISCUSSION

I. Substantial Evidence Supports The Jury’s ...


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