California Court of Appeal, Second District, Fifth Division
APPEAL from a judgment of the Superior Court of the County of Los Angeles, David S. Milton, Judge. Affirmed. (Los Angeles County Super. Ct. No. EC052556).
[166 Cal.Rptr.3d 878] Law Offices of Barry K. Rothman, Barry K. Rothman, and Gordon J. Zuiderweg, Los Angeles, for Defendant and Appellant.
Law Offices of Michael C. Murphy, Michael C. Murphy, Burbank, for Plaintiff and Respondent.
Defendant Nicholas J. Mora appeals from a judgment in favor of plaintiff Welco Electronics, Inc., and against defendant, on plaintiff's claim for conversion, and against defendant and in favor of plaintiff on defendant's cross-complaint. Defendant contends the trial court erred in denying his motion for nonsuit based on the ground of insufficient evidence to support [166 Cal.Rptr.3d 879] the plaintiff's cause of action for conversion.
In the published portion of this opinion, we determine that defendant's use of plaintiff's credit card on defendant's credit card terminal to transfer improperly specific sums of money to defendant's bank account was a conversion as pleaded by plaintiff. We affirm.
In 1996 plaintiff employed Lidia Gimenes as a certified bookkeeper. Between 1996 and February 2010, she was not plaintiff's employee, but she made social visits at plaintiff's place of business " all the time," visiting Darrel Derouis, plaintiff's then-president, and other employees of plaintiff.
In February 2010, Derouis hired Gimenes to work for plaintiff because he wanted her assistance in " find[ing] where his money went." A few weeks before Derouis hired Gimenes, plaintiff no longer employed defendant Natalie Anderson,  plaintiff's accountant, because she " took off with no notice."
Gimenes conducted an investigation and noticed that there was a discrepancy between the entries on plaintiff's credit card statements and the amount of expenses. She examined plaintiff's credit card statements contained in plaintiff's files located in Anderson's office and determined that the entries on those statements did not match the total sum listed on the statements, thus suggesting that entries had somehow been deleted.
Gimenes reviewed plaintiff's credit card statements she obtained from the credit card company and determined that they contained numerous charges to " AQM," a fictitious name used by defendant for a company he had established. Plaintiff's credit card statements located in Anderson's office did not contain charges to AQM. Gimenes also found plaintiff's accounting " chart" for AQM, but, unlike the charts for all of plaintiff's other vendors, no transactions were entered on it.
Based upon her review of the records, Gimenes determined that all of the AQM charges made on plaintiff's credit card account from 2009 to 2010, totaled $372,039.01, the principal amount that plaintiff sought in this case against defendant. She said that based on her investigation, she determined that plaintiff made the payments for the credit card statements reflecting entries for AQM.
Gimenes said she discussed this matter with Derouis, and Derouis decided to hire counsel and proceed with a lawsuit against defendant. In December 2010, Derouis died and Gimenes became plaintiff's president.
Plaintiff retained William Torres, a certified public accountant practicing forensic accounting, to conduct an investigation of plaintiff's accounting system because plaintiff was " concerned [that] there were transactions ... that were not properly recorded or improprieties." Torres was to " come in and determine and trace any potential improprieties." Upon conducting his investigation, Torres concluded that a vendor file for AQM was set up, but it bore the address of another client and did not contain further details or transactions with respect to AQM. Torres did not find any invoices for AQM in plaintiff's records and determined that the unrecorded AQM transactions caused an imbalance to plaintiff's balance in the sum of $280,000. Torres found that there " clearly" appeared to be " a concealment" by not reporting properly the so-called AQM transactions, and [166 Cal.Rptr.3d 880] there was " some sort of manipulation done to not include these transactions within the system."
Defendant provided an explanation for the accounting discrepancies. In 2006, defendant started a business called Nicholas Mora Property Management, a real property management company, and he operated that business from plaintiff's place of business. From 2006 to 2010 defendant also performed work for plaintiff as a quality assurance manager, and other computer services for plaintiff. According to defendant, he was to be compensated for his prior services when plaintiff's quality assurance computer system on which he worked was " certified" with a score of 100 percent.
Defendant said that in June 2008, the quality assurance computer system was certified with a score of 99 percent, and Derouis agreed to compensate defendant for his prior services. According to defendant, Derouis was concerned about a garnishment of defendant's wages if plaintiff paid defendant by check; therefore, Anderson, plaintiff's accountant at the time, whose responsibilities included payment of accounts payable, suggested, and Derouis " ultimately" agreed, that defendant be paid like a vendor using plaintiff's credit card account. Defendant said he and Derouis agreed that defendant would be paid $100,000 for defendant's work the prior year. Anderson set up in her office a " swiping machine" credit card terminal. Defendant opened a bank account in his name and the name of Nicholas Mora Property Management, which did business under the name of AQM Supplies. Defendant, as owner of Nicholas Mora Property Management, dba AQM Supplies, leased a swiping machine credit card terminal.
Defendant said that from 2008 to January 2010, he submitted to plaintiff about 50 or 60 invoices for the work he performed, and, although he " was not the one who processed" the charges to plaintiff's credit card account, he collected money on the credit card transactions. That money was paid
through defendant's credit card terminal and electronically deposited into his bank account. From 2008 to 2009, while Anderson was working full-time for plaintiff, defendant paid Anderson about $100,000.
Defendant stated that in 2010, he and Derouis had an argument; Derouis was angry, believing that defendant had " ripped him off" by over $300,000. Derouis asked defendant to leave the premises, would not allow defendant to return to gather his possessions, ...