Opinion ID: 796307
Heading Depth: 3
Heading Rank: 3

Heading: Lehman's substantial assistance of First Alliance's fraudulent lending scheme

Text: 49 Lehman also appeals the denial of its motion for judgment as a matter of law on the ground that plaintiffs failed to prove the second prong of the aiding and abetting test, that Lehman substantially assisted First Alliance's fraud. We employ the same de novo standard of review to this element of Lehman's motion for judgment as a matter of law as we did to the actual knowledge prong, see Forrett, 112 F.3d at 419, and we likewise conclude that the jury's finding that Lehman substantially assisted First Alliance's fraudulent lending practices should not be disturbed. 50 As was true of the actual knowledge prong of aiding and abetting under California law, the definition of substantial assistance under California law is not entirely clear. See Casey, 26 Cal.Rptr.3d at 405-406 (finding no California cases directly addressing the question of what constitutes substantial assistance). Against such a backdrop, we again follow Casey's lead in holding that `ordinary business transactions' a bank performs for a customer can satisfy the substantial assistance element of an aiding and abetting claim if the bank actually knew those transactions were assisting the customer in committing a specific tort. Knowledge is the crucial element. Casey, 26 Cal.Rptr.3d at 406. 51 It appears that the jury found, as did the district court (298 B.R. at 668), that Lehman satisfied all of First Alliance's financing needs and, after other investment banks stopped doing business with First Alliance, kept First Alliance in business, knowing that its financial difficulties stemmed directly and indirectly from litigation over its dubious lending practices. That was enough to conclude that Lehman was providing the requisite substantial assistance. Lehman admits that it knowingly provided significant assistance to First Alliance's business, but distinguishes that from providing substantial assistance to fraud. In a situation where a company's whole business is built like a house of cards on a fraudulent enterprise, this is a distinction without a difference. The jury was not precluded as a matter of law from finding that Lehman substantially assisted First Alliance in its fraud.