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People v. Kaufman

California Court of Appeals, Fourth District, First Division

November 16, 2017

THE PEOPLE, Plaintiff and Respondent,
v.
JACK H. KAUFMAN, Defendant and Appellant.

         APPEAL from a judgment of the Superior Court of San Diego County, No. SCD255318 Robert F. O'Neill, Judge. Affirmed.

          John L. Staley, under appointment by the Court of Appeal, for Defendant and Appellant.

          Xavier Becerra, Attorney General, Gerald A. Engler, Chief Assistant Attorney General, Julie L. Garland, Assistant Attorney General, Eric A. Swenson, Lynne McGinnis, and Jennifer B. Truong, Deputy Attorneys General, for Plaintiff and Respondent.

          DATO, J.

         On what can only be described as an unusual set of facts, a jury convicted Jack Kaufman of grand theft of personal property belonging to his longtime friend Dr. Steven Emmet. (Pen. Code, § 487, subd. (a).)[1] At trial, the prosecution's theory was that Kaufman: (1) sold Emmet a promissory note on property owned by Aaron Reinicke; (2) renegotiated the note with Reinicke and reconveyed the property to him free and clear without telling him that Emmet owned the note or informing Emmet of the transaction; and (3) deprived Emmet of Reinicke's final payment of around $36, 000 on the note. The prosecution claimed the evidence supported conviction for grand theft by larceny, and the jury was instructed on only that theory of theft.

         On appeal Kaufman claims that to the extent any crime occurred, it was theft by false pretenses as to Reinicke, not larceny as to Emmet. Accordingly, he maintains, the trial court instructed the jury on the wrong offense allegedly committed against the wrong victim. As he did at trial, he also argues there was no theft because Emmet exercised his right of recourse, allowing Kaufman to renegotiate the note with Reinicke. Kaufman contends that Emmet's alleged attempt to extort repayment from Kaufman was a defense to the crime of larceny, and he asserts the trial court prejudicially erred when it refused to admit relevant evidence or instruct the jury on that defense. The People oppose each of these contentions, but argue the court committed sentencing error in ordering summary probation.

         We affirm. Viewing these unusual facts in the light most favorable to the verdict, we conclude substantial evidence supports Kaufman's conviction for grand theft by larceny, and the trial court properly instructed the jury on that offense. We find no basis to conclude that a victim's attempted extortion of the defendant presents a valid defense to a charge of theft by larceny. Even if it were a valid defense, the evidence Kaufman sought to introduce came in at trial and did not present substantial evidence of extortion to warrant a jury instruction. Finally, we reject the People's claim of sentencing error and conclude that by ordering summary probation, the trial court classified Kaufman's offense as a misdemeanor by operation of law.

         FACTUAL AND PROCEDURAL BACKGROUND

         In January 2002 Kaufman sold an office property to Reinicke, taking back a $55, 000 promissory note secured by a second trust deed. Reinicke was to repay the note at seven percent interest over 10 years, in monthly installments of around $365 credited toward both interest and principal, with a balloon payment at the end of the 10-year period. The note permitted Reinicke to repay the note early in full or in part at any time before maturity without penalty.

         Kaufman and Emmet had a 25-year personal and professional relationship. In November 2002 Kaufman proposed that Emmet buy the Reinicke note as an investment vehicle for his pension plan. On December 2, 2002, Kaufman sent Emmet a letter offering to sell the note at a discounted rate of $45, 000, and stating that Kaufman "personally guarantee[d] [for] the full performance of the maker of the note as to the $45, 000 paid for the discounted note." Emmet said he understood this language to mean that Kaufman personally guaranteed repayment of not only the $45, 000 principal, but also the investment as a whole. At trial Kaufman claimed he had only offered Emmet a right of "recourse, " with Kaufman guaranteeing repayment of only the $45, 000 principal. In total, Emmet expected to receive around $80, 000 at the end of 10 years, making it an attractive investment.

         Emmet bought the note from Kaufman for $45, 000 and recorded an assignment of deed of trust at the San Diego County Recorder's Office. Kaufman instructed Reinicke in writing to direct payments to Emmet, but he never told him he had sold the note to Emmet.[2] Emmet received monthly checks directly from Reinicke, but at times Reinicke missed payments and Kaufman would send Emmet a check directly.

         In December 2010 with a $40, 000 balance remaining on the note, Reinicke approached Kaufman to renegotiate the terms. Kaufman offered a 10 percent discount if he repaid the balance in full by the end of the month, and Reinicke accepted. Reinicke thought Kaufman still owned the note when he gave him two cashier's checks totaling $36, 732. On December 23, 2010, Kaufman executed a "Substitution of Trustee and Full Reconveyance" representing that he was the "legal owner and holder" of the Reinicke promissory note. Reinicke recorded the reconveyance at the San Diego County Recorder's Office on March 4, 2011.

         Shortly after the reconveyance, on January 2, 2011, Kaufman sent Emmet an email stating, "Reinicke is having financial difficulties and I have decided to bite the bullet-I am going to be making payments to you under my guarantee to you.... [¶] I need to pick up the original note and trust deed asap so I can put maximum pressure on Reinicke." Emmet replied, "[W]e appreciate your putting the pressure on him... and we're happy to make you a copy of the note...." He never gave Kaufman the original note. From that point forward, Kaufman made occasional payments of around $365 to Emmet. Emmet received one payment in January 2011, another seven months later, and another four months after that; Kaufman never made up payments for the months missed.

         Kaufman testified at trial that Emmet exercised his right of recourse in December 2010 before Reinicke asked for an early payoff discount. He claimed he had asked Emmet to give him a copy of the note and trust deed in January 2011 in order to put pressure on Reinicke in an unrelated transaction. However, Emmet testified he never agreed to assign the note to Kaufman and always believed the note remained in his name.

         In July 2012 Emmet emailed Kaufman, "i think reinicke is about 6 months behind... what will it take to bring him up to date... and keep him there?" Kaufman replied that Reinicke was "gradually making up the delinquencies" and suggested "it makes good sense to work with him." In September 2012 Emmet asked Kaufman, "is he ever going to pay this? as you advised me what a great deal this is... how do we get out of this or bring him up to date?" Kaufman replied he would pick up a check from Reinicke personally and deliver it to Emmet. Two months later Emmet emailed again about Reinicke's missed payments, and Kaufman wrote, "Will meet with him myself in January [2013] and get a specific plan to bring account current and stay current first certain." In December Emmet wrote to Kaufman that Reinicke was "about a year behind" and asked when he would make up missed payments. Kaufman replied, "I will see as I have told you that reinke [sic] will pay-i am guaranteeing it as you know." Emmet pressed Kaufman that the note was due in full many months ago, in February 2012. Kaufman replied that Reinicke needed more time to pay it off and stated an extension was part of the original deal. Emmet responded that he had no documentation of having authorized an extension on the note.

         At some point Emmet called Reinicke himself about the missed payments. Reinicke told Emmet he had repaid the note in full in 2010. Emmet was shocked because he had never given Kaufman authority to negotiate early repayment and continued to believe he owned the note. Nevertheless, Emmet trusted Kaufman and did not know Reinicke; he initially assumed what Reinicke had told him was not true.

         When Emmet inquired of Kaufman in early January 2013, Kaufman told him that the deed Reinicke paid off was not the trust deed attached to the note Emmet had purchased. Kaufman also agreed to pay Emmet the remaining $38, 000 on the Reinicke note, plus missed payments, pursuant to his personal guarantee. On January 22, 2013, Kaufman sent Emmet an email stating, "Reinke [sic] in light of his discussion with you is thinking that he has some leverage or advantage to get more favorable terms than I had originally offered him back when-so I have decided in light of my promise to you from day one that the payment is guaranteed by me personally and with full recourse-to do the following.

         "1. I am sending today the $368 or so check due for this month;

         "2. I am going to pay each following month $368 or more against the note and arrearages [... ];

         "3. I am going to Pay the full balance due your plan plus the arrearages no later than July 31, 2013;

         4. At the time of payoff-your plan is to assign back to me the note and security and I will pursue the matter with Reinke [sic] at that time.

         "The end result will be that your [pension] plan will have received exactly what was promised."

         Emmet understood this language to mean that Kaufman would pay off the full balance of outstanding principal and interest due on the note by July 31, 2013.

         Kaufman did not send the funds, and in August 2013, Emmet pressed him to pay the $55, 000 face value of the note, minus whatever principal had been paid over the years. Emmet wrote, "as you have seen from the documents i sent you the second trust deed was repaid completely by reineke [sic] LAST YEAR... and you did not mention this or forward that money to me. exactly how much did mr. reineke pay you?" After a heated exchange between the parties as to the amount of principal remaining on the Reinicke note, Kaufman agreed to pay Emmet $45, 000 to settle the matter.

         In late August Kaufman sent Emmet a check for $45, 852, but it did not clear due to insufficient funds. Kaufman told him he had stopped payment on the check, believing it had gotten lost in the mail. Emmet requested another check. Kaufman sent a second check for the same amount in early September. At trial Kaufman claimed Emmet had agreed to hold that check as collateral while Kaufman secured funding; Emmet denied there was any such agreement.

         On October 1, 2013, Kaufman asked Emmet to hold the second check for another two weeks so that he could secure a third-party loan. Emmet refused that request as "unacceptable, " said he would deposit the check, and "should it bounce [he would] have to make some difficult but necessary decisions." He denied intending his statement that he would decide "what steps need to be taken" as a threat, but that is how Kaufman claimed he took it. Emmet deposited the check, but it did not clear due to insufficient funds. Kaufman wrote, "I just noticed that you deposited the check which we agreed you would hold until I got the coverage arranged. It will not clear as you well know. Not sure what you are trying to do." Emmet contacted law enforcement.

         In September 2015 Kaufman was charged with one count of grand theft of personal property belonging to Emmet (§ 487, subd. (a)) and two counts of writing checks with insufficient funds (§ 476a, subd. (a)). The latter two counts were dismissed pursuant to a section 995 motion in October 2015.

         The case proceeded to a jury trial in April 2016. The People presented the testimony of Emmet, Reinicke, and records custodians from the San Diego County Recorder's Office and Wells Fargo. Reinicke testified he was unaware of the 2002 assignment to Emmet and believed Kaufman owned the note when he reconveyed the property in 2010. Emmet testified he was unaware of the 2010 reconveyance and was never told at any point that he no longer owned the note.

         Kaufman testified in his defense. He claimed he had guaranteed only the $45, 000 principal Emmet paid on the note, and that Emmet exercised his right of recourse in 2010, allowing Kaufman to extinguish the note without informing Emmet. He claimed he agreed to settle the matter with Emmet in 2013 for $45, 000 solely to maintain their friendship. When confronted with various emails he sent Emmet in 2012 and 2013 suggesting Reinicke still owed money and that Kaufman would meet with Reinicke in person, Kaufman claimed that he was referring to his own obligations as guarantor of the Reinicke note.

         The jury convicted Kaufman of grand theft. In June 2016 the trial court sentenced him to summary probation and ordered him to pay Emmet $36, 732 in restitution, as stipulated by the parties.[3]

         DISCUSSION

         Kaufman was charged with grand theft under section 487, subdivision (a), for the theft of "money, labor, or real or personal property taken... of a value exceeding nine hundred fifty dollars ($950)." Theft, in turn, is defined in section 484, subdivision (a):

         "Every person who shall feloniously steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, or who causes or procures others to report falsely of his or her wealth or mercantile character and by thus imposing upon any person, obtains credit and thereby fraudulently gets or obtains possession of money, or property or obtains the labor or service of another, is guilty of theft."

         Section 484 consolidates the offenses of larceny, theft by false pretenses, and embezzlement into the single crime of "theft." (People v. Gonzales (2017) 2 Cal.5th 858, 865-866 (Gonzales).)

         Kaufman contends his conviction should be reversed for insufficient evidence of grand theft by larceny as to Emmet and argues prejudicial error in the failure to instead instruct the jury on grand theft by false pretenses as to Reinicke. He claims Emmet's alleged extortion was a proper defense to the crime of larceny and challenges the trial court's evidentiary ruling and refusal to instruct the jury on that ground. We address these contentions in turn and either find no error or conclude any error was harmless. We further reject the People's contention that the grant of summary probation was erroneous.

         1. The Crime of Theft in a Historical Context

         Because several of Kaufman's arguments are premised on the notion that a different theory of theft should have been pursued in this case, we start with a brief background of the three crimes consolidated under the crime of "theft." Early criminal laws in most American states adopted Great Britain's 18th century division of theft into three separate crimes. (People v. Vidana (2016) 1 Cal.5th 632, 639 (Vidana).) This led to " 'seemingly arbitrary distinctions' " between the offenses and the burden posed for the prosecution. (Ibid.) " 'For instance, it was difficult at times to determine whether a defendant had acquired title to the property, or merely possession, a distinction separating theft by false pretenses from larceny by trick.' " (Ibid.) " 'It was similarly difficult at times to determine whether a defendant, clearly guilty of some theft offense, had committed embezzlement or larceny.' " (Ibid.) In 1927 California joined many states in consolidating the separate offenses of larceny, false pretenses, and embezzlement into the single crime of theft. (Id. at pp. 639-640.) The Legislature also enacted section 490a, which provides: "[w]herever any law or statute of this state refers to or mentions larceny, embezzlement, or stealing, said law or statute will hereafter be read and interpreted as if the word 'theft' were substituted therefor." (Vidana, at p. 641.)

         " 'The purpose of consolidation [in 1927] was to remove the technicalities that existed in the pleading and proof of these crimes at common law.' " (Gonzales, supra, 2 Cal.5th at p. 865.) But it did so only to a point. Although the crimes were consolidated under the general crime of "theft, " the underlying elements did not change; "to prove its commission, the evidence must establish that the property was stolen by larceny, false pretenses, or embezzlement." (Id. at pp. 865-866; see Vidana, supra, 1 Cal.5th at pp. 641-642 [same].)

         In its current formulation, larceny is the trespassory taking and carrying away of personal property of another with the intent to permanently deprive the owner of possession. (People v. Williams (2013) 57 Cal.4th 776, 781-782 (Williams); People v. Davis (1998) 19 Cal.4th 301, 305 (Davis); CALCRIM No. 1800; § 484, subd. (a).) Embezzlement occurs where "the owner entrusted property to the defendant, the owner did so because he or she trusted the defendant, the defendant fraudulently converted the property for his or her own benefit and, in doing so, the defendant intended to deprive the owner of its use." (People v. Beaver (2010) 186 Cal.App.4th 107, 121 (Beaver); see CALCRIM No. 1806; § 503.) And theft by false pretenses "involves the consensual transfer of possession as well as title of property." (Williams, at p. 788.) It occurs where " '(1) the defendant made a false pretense or representation ...


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