1 Filed 1/29/14 Altisource Solutions v. Quick Home Restore CA4/2 NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELL ATE DISTRICT DIVISION TWO

ALTISOURCE SOLUTIONS, INC., Plaintiff and Respondent,

v. QUICK HOME RESTORE et al., Defendants and Appellants. E055902 (Super.Ct.No. RIC1119073) OPINION

APPEAL from the Superior Court of Rive rside County. Paulette D. Barkley, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed. Zulu Ali for Defendants and Appellants. Houser & Allison, Eric D. Houser, a nd Joshua D. Watts for Plaintiff and Respondent. This action reaches us at a very rudiment ary stage. Plaintiff Altisource Solutions, Inc. (Altisource) filed a complaint accusing de fendants of fraud and breach of contract. Simultaneously, it applied for a right to attach order, which the trial court granted against2 some defendants and denied against others. The facts are murky; there has been no discovery yet; and both sides have inexplicab ly failed to introduce evidence that one would have expected them to introduce. It is not even clear how many appellants th ere are. The notice of appeal was filed on behalf of defendants Quick Home Re store (QHR) and S&H Global Trades, LLC (S&H). There is some eviden ce that QHR is merely a “dba” name of S&H and has no separate existence. However, there is also some contrary evidence that QHR may be a separate entity. The opening brief asserts th at these two entities are one and the same, but the attached Certificate of In terested Entities or Persons suggests otherwise. We will use the term “appellants” to encompa ss both QHR and S&H collectively. In this appeal, appellants contend that th e trial court erred by issuing a right to attach order against them because: 1. Altisource failed to carry its burden of showing the probable validity of its breach of contract claim. 2. The trial court shifted the burden of proof by requiring defendants to produce evidence. We find no error. Hence, we will affirm. I FACTUAL BACKGROUND The following facts are taken from the decl arations filed in support of and in opposition to the application fo r a right to attach order.3 A. Altisource’s Evidence

. Altisource submitted the declaration of Tara Williams, its Vice President of Field Services. Williams testified that Altisource is in the business of maintaining and selling foreclosed properties. Altisource contracts with outside vendors to do maintenance work on its properties, including repa irs, painting, and cleaning. In January 2011, QHR app lied to Altisource to beco me an approved outside vendor. According to the app lication, the principals in QHR were Shahid Jalal and Ronald Singh. QHR had a California general contractor’s license. QHR represented that it had no employees and no independent contractors. Altisource approved the application. It was Altisource’s policy not to ask for backup documentation for invoices of $500 or less. QHR was aware of this policy. In October 2011, QHR submitted invoices totaling $172,786, supposedly for work done on Altisource properties in 26 states a nd the District of Columbia. None of the invoices was for more than $500. The invoice amounts were repetitive — they were all for either $350, $395, $450, $465, $475, $ 485, $499, or $500. There were multiple invoices for work done on th e same property. For exampl e, QHR submitted six separate invoices, each for work supposedly done on a pr operty on 11th Avenue in Largo, Florida, in the amounts of $485, $500, $485, $395, $4 65, and $499.4 QHR also claimed to have done work in multiple states on the same day. 1 For example, it submitted four invoices, all date d July 1, 2011, for work on properties in California, Texas, Ohio, and Georgia. It s ubmitted invoices dated Ju ly 1 through July 7, 2011, for work on a total of 20 properties in nine states. Altisource realized that the invoices we re for work suppos edly done after the properties had already been sold to third par ties. It therefore as ked QHR for supporting documentation. QHR responded that it could not provide the documentation because of a “computer malfunction.” 2 At that point, Altisource stopped making payments on the invoices. Meanwhile, however, it had already paid QHR $120,024. B. Defendants’ Evidence

. Defendants submitted the declara tion of Shahid Jalal, who testified that he was the “owner” of QHR.

1 This assumes that the date listed as the “[i]nvoice date” was when QHR supposedly did the work. In the trial court, Altisource adopted this interpretation, and QHR did not dispute it, even thou gh it reflected negatively on QHR.
2 Altisource claims that one term of th e contract to which QHR agreed was that QHR would produce backup doc umentation on request, so th at its failure to produce backup documentation was, in itsel f, a breach. However, there is no evidence of this. Admittedly, Altisource’s complaint did allege that this was a term of the contract, but the complaint was not verified and thus could not serve as evidence in support of the attachment application. (C ode Civ. Proc., § 482.040.)5 According to Jalal, Altisource requires vend ors to submit invoices via its website. However, a vendor cannot submit an invoice until Altisource has set up a work order on its website. Between June and August 2011, Altisource 3 gave QHR work orders by email and by phone. Most of these wo rk orders came from Stanley Varghese, an employee of Altisource. QHR “completed the work orde rs per the requests made by Altisource.” However, QHR could not submit invoices fo r those work orders until October 2011, which was when Altisource finally set up the wo rk orders on its webs ite. Jalal testified that “[a]ll the invoices submitted . . . were fo r work that was completed prior to October 2011.” When Altisource asked for backup docu mentation, QHR could not provide it because the hard drive of its computer had crashed. However, Jalal did tell Altisource that Varghese should have ema ils and other documentation. II PROCEDURAL BACKGROUND Altisource filed this action against seve n named defendants , including QHR and S&H, asserting causes of action for breach of contract, fraud, and money had and received, among other things. At the same time, it filed an application for a right to attach order against all defendants.

3 Jalal was inconsistent about whether these work orders actually came from Altisource or from “Ocwen, the parent company of Altisource . . . .”6 Defendants filed an oppositio n to the application. They argued, among other things, that Altisource had not shown th e probable validity of its claim. At the hearing on the applic ation, counsel for defendants argued that there was no evidence that any of the defendants other than QHR and S&H were liabl e. The trial court granted the application solely as against QHR and S&H; with re gard to the other defendants, it continued the hearing. It se t a briefing schedule for defendants to submit additional evidence and fo r Altisource to reply. The other defendants did file further briefi ng, but they did not file any additional evidence (other than on e unauthenticated docu ment to which Altisource duly objected). Altisource, too, filed further briefing, plus some additional evidence. After a further hearing, the trial court denied the applica tion with respect to the other defendants. III THE SUFFICIENCY OF THE EVIDENCE OF A BREACH OF CONTRACT

Appellants contend that Altisource failed to show that th e work that QHR submitted invoices for was not done. An attachment must be based on a contr act claim. (Code Civ. Proc., § 483.010, subd. (a).) To obtain a right to attach order, the plaintiff must establish the “probable validity” of its claim. (Code Civ. Proc., § 484.090, subd. (a)(2).) “A claim has ‘probable validity’ where it is more likely than not that the plaintiff will obtain a judgment against the defendant on that claim.” (Code Civ. Proc., § 481.190.)7 “A trial court’s finding [of probable va lidity] will be upheld if supported by substantial evidence. [Citations.]” ( Series AGI West Linn of A ppian Group Investors DE LLC v. Eves (2013) 217 Cal.App.4th 156, 162.) “‘ “[W]e must consider the evidence in the light most favorable to the prevailing pa rty, giving such party the benefit of every reasonable inference, and resolving all conflicts in support of the judgment. [Citation.]” [Citation.]’ [Citation.]” ( Chino Commercial Bank, N.A. v. Peters (2010) 190 Cal.App.4th 1163, 1169-1170 [Fourth Dist., Div. Two].) Here, both parties failed to introduce evid ence that one would have expected them to introduce — if it existed. For example, Altisource failed to introduce evidence of whether it ever actually issued work orders for the work that QHR claimed to have done. 4 It also failed to introdu ce evidence that it had chec ked with Stanley Varghese. 5 At the same time, however, defendants failed to in troduce the alleged emails from Varghese (which would have survived a hard drive crash, because they would have been on Gmail’s servers). It also failed to introdu ce any time sheets, invoices, receipts, or other documentary evidence that it ha d actually done the work.

4 Williams did testify that “[t]he $12 0,024 paid to [Q HR] was for work order[s] that were never authorized by A ltisource.” However, she did not explain how she knew they were never auth orized. Thus, this was a legal conclusion, which, even absent objection, was not substantial evidence. ( Daniell v. Riverside Partners I, L.P. (2012) 206 Cal.App.4th 1292, 1296, fn. 1 [Fourth Dist., Div. Two].)
5 At the continued hearing, after the tr ial court had already granted a right to attach order as to QHR and S&H, counse l for Altisource claimed that Altisource had fired Varghese and believed he had been in on the fraud.8 Even looking just at the evid ence that is before us, how ever, there is substantial evidence that QHR was engaged in a fraudulent scheme. It represented that it had just two owners, no employees, and no independent c ontractors, and that it had a contractor’s license only in California. Nevertheless, it s ubmitted invoices for work done in 27 states — sometimes in as many as four far-flung states on a single day. In addition, QHR submitted mult iple invoices for work done at the same property. It broke these invoices down into amounts no greater than $500, in the knowledge that Altisource normally did not reques t backup documentation for invoices for $500 or less. The amounts of the invoices we re suspiciously repetitive. Finally, the invoices were for work supposedly done after the properties had already been sold to third parties. Jalal trie d to explain that this was because he was not able to submit the invoices via Altisource’s website until October 2011. Williams’s declaration, however, fairly understo od, stated that th e dates when QHR claimed to have done the work — not merely the dates when QHR submitted the invoices — were after the properties were sold. The printouts attach ed to Williams’s declaration supported this; they showed that Altisource wa s aware that QHR was at leas t claiming to have done the work between June and September 2011. The evidence that it would have been almo st impossible for QHR to have done the work that it claimed to have done, along with all of the other evidence of a fraudulent scheme, supported a finding that QHR did not actually do any of the work.9 In their reply brief, appellants argue that the evidence showed , at most, a tort rather than a breach of cont ract. They forfeited this argument, however, by failing to raise it in their opening brief. ( West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 799.) Separately and alternatively, the argument lacks merit. Attach ment is permitted on “a claim . . . for money . . . based upon a contract, express or implied . . . .” (Code Civ. Proc., § 483.010, subd. (a), italics added.) Here, there was a failure of consideration — Altisource paid for work that was not done. “‘It is we ll settled that when a sum of money has been paid pursuant to the terms of a sales contract and the consideration for the sale has entirely failed, the law will impl y a promise on the part of the vendor to repay the money; and in such case an attach ment will lie. [Citati ons.]’ [Citations.] Moreover, attachment will i ssue on such an action, to recover money paid under a contract, on failure of consideration even though there was no re scission by plaintiff [citations] or rescission of the contract specifically pleaded. [Citation.]” ( Landry v. Marshall (1966) 243 Cal.App.2d 170, 176.) We see no reason to treat a services contract differently from a sales cont ract in this respect. We therefore conclude that the trial c ourt correctly found that Altisource had shown the probable validity of a contract claim.10 IV SHIFTING THE BURDEN OF PROOF Appellants contend that the trial court erro neously shifted the burden of proof to them. Basically, they are complain ing about two types of comments that the trial court made at the initial hearing. First, the trial court pointed out that de fendants had not introduced evidence that should have been read ily available to them. For exampl e, it stated, “[W]hether there’s a computer crash or not, there should be somebo dy [Jalal] can talk to, if somebody did the work . . . .” Second, the trial court suggested that defendants should submit additional evidence. For example, it st ated: “[M]aybe [defendants] can help me out with a declaration explaining what this proce ss is and who did what work when.” We consider the second type of comment fi rst. It must be recalled that, at the initial hearing, the trial court granted the right to attach order as against appellants; it continued the hearing, and it allowed the pa rties to submit additio nal evidence, solely with respect to the other defendants. Acco rdingly, appellants c ould not possibly have been prejudiced by the su ggestion that defendants submit additional evidence. The challenge to the second type of co mment also fails because the attachment statutes explicitly allow the court to request further evidence. Code of Civil Procedure section 484.090, subdivision (d), as relevant here, provides: “[U]p on good cause shown,11 the court may receive and consider at th e hearing additional evidence, oral or documentary, and additional points and authoritie s, or it may continue the hearing for the production of the additional eviden ce or points and authorities.” This is true regardless of whether the moving party ha s carried its initial burden. Also, appellants fail to mention the fact that their attorney had just said he wanted to submit additional evidence. He stated: “One other thing, I just received copies of the work orders . . . that w[ere] sent to Mr. Ja lal. He’s got those wo rk orders, and I would like — I just got them. So I didn’t have an opportunity to submit them.” 6 In that context, there was nothing wrong with th e trial court suggesting that he also submit any other evidence that it would find helpful. This leaves only appellants’ challenge to th e first type of comment. We agree that Altisource had the burden of pr oving that defendants did not actually do the work. If Altisource failed to meet this burden, it would be error to grant the right to attach order solely because appellants did not prove that they did actually do the work. Here, however, as we already held in part III, ante , Altisource carried its burden. At that point, the trial court could prop erly consider defendants’ failure to introduce expected evidence. Evidence Code section 412 provides: “If weaker and less satisfactory evidence is offered when it was within the power of the party to produce

6 Even though the trial court continued the hearing and allowed the parties to submit additional evidence, defendants ne ver actually filed these work orders.12 stronger and more satisfactory evidence, the evidence offered shou ld be viewed with distrust.” We therefore conclude that the trial cour t did not erroneously shift the burden of proof. V DISPOSITION The judgment is affirmed. Altisource is awarded costs on appeal against QHR and S&H. NOT TO BE PUBLISHED IN OFFICIAL REPORTS

RICHLI J. We concur:

HOLLENHORST Acting P. J.

McKINSTER J.