Court Opinion

ID: 2644295
Source: CourtListenerOpinion
Date Created: 2013-11-27 00:30:05.367858+00
Date Added: 2024-06-11T12:53:31.145394
License: Public Domain

Filed 11/26/13 P. v. Nazarzai CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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 APPELLATE DISTRICT

                                                DIVISION THREE

THE PEOPLE,

     Plaintiff and Respondent,                                         G047866

         v.                                                            (Super. Ct. No. 30-2009-00125950)

ZULMAI NAZARZAI,                                                       OPINION

     Defendant and Appellant.

                   Appeal from a postjudgment order of the Superior Court of Orange County,
Andrew P. Banks, Judge. Affirmed. Motion to strike portions of appellant’s reply brief.
Denied.
                   Law Offices of Murphy & Eftekhari, Thomas Murphy and Afshin Eftekhari
for Defendant and Appellant.
                   Kamala D. Harris, Attorney General, Frances T. Grunder, Assistant
Attorney General, Michele R. Van Gelderen and Sheldon H. Jaffe, Deputy Attorneys
General, for Plaintiff and Respondent.
                                          *                  *                  *
                                    INTRODUCTION
              In 2009, the Attorney General filed a complaint alleging defendant
Zulmai Nazarzai and his codefendants preyed on consumers who were facing
foreclosures of their homes, by unlawfully charging those consumers thousands of dollars
in “up front fees” while “falsely promising to help them negotiate better mortgage terms
from their lenders and to rescue them from foreclosure.” Within hours of Nazarzai being
served with an order freezing his assets, he withdrew $426,318 from a bank account. The
trial court ordered Nazarzai to turn over $360,540 in cash to a court-appointed receiver
by a certain date and time. After Nazarzai did not comply with the court’s order,
contempt proceedings were conducted. The court convicted Nazarzai of contempt and
Nazarzai remains in custody.
              Judgment was entered following a bench trial, requiring Nazarzai and his
codefendants to pay, inter alia, over $2 million in civil penalties; Nazarzai did not appeal
from the judgment. The trial court granted the Attorney General’s application to issue a
second turnover order requiring Nazarzai to deliver the $360,540 in cash by a certain date
and time to the Orange County Sheriff pursuant to a writ of execution on the judgment
that had been issued. Nazarzai appeals, asserting the second turnover order was issued in
error.
              We affirm. The second turnover order was issued pursuant to the writ of
execution on the judgment as authorized by section 699.040 of the Code of Civil
Procedure.
                                                  1
                                          FACTS
              Defendant Statewide Financial Group, Inc., which did business as
WeBeatAllRates.com and US Homeowners Assistance (USHA), was co-owned by
Nazarzai along with defendants Hakimullah Sarpas and Fasela Sheren. USHA “ran a
         1
        The summary of facts is based on the trial court’s statement of decision issued
following trial on the complaint in this matter.

                                             2
boiler-room telemarketing operation” which involved making cold calls to consumers and
offering loan modification services. “The cost for the service varied, but generally ran to
the thousands of dollars which consumers had to pay in advance. USHA’s sales
representatives routinely made extravagant and false promises to consumers, including:
USHA had a ‘97%’ success rate; the customer was guaranteed a loan modification;
USHA had a money-back guarantee; USHA’s fees would be repaid by the lender; USHA
was an ‘attorney-based’ company; USHA would save the consumer[’]s home from
foreclosure; and that the loan modification process would take a relatively short amount
of time.”
              USHA also routinely sent consumers false and deceptive letters suggesting
that USHA would secure a 20 percent reduction in the outstanding principal of their
home loans, “a significant reduction in their mortgage interest rate, a correspondingly
large reduction in their monthly payment, and forgiveness of past arrears.” No evidence
was admitted at trial, showing that “any customer ever received any benefit as a result of
the efforts of USHA, or even that USHA ever negotiated with a bank or mortgage lender
on behalf of a customer of USHA, although evidence was presented that USHA
submitted false information to lenders.” As a result of their deceptive and misleading
practices, USHA procured over $2 million in up-front payments from consumers.
                                      BACKGROUND
                                             I.
                                      THE COMPLAINT
              On July 13, 2009, the Attorney General filed a complaint for civil penalties,
a permanent injunction, and other equitable relief, against USHA, Sarpas, Nazarzai, and
                                  2
Sheren (collectively, defendants). The complaint alleged defendants made untrue or

       2
         The complaint also named US Homeowners Preservation Center, Inc., and
Rasha Yehia Melek, as defendants. The trial court granted US Homeowners Preservation
Center, Inc.’s motion for nonsuit, and Melek was dismissed as a defendant before trial.

                                             3
misleading representations and alleged claims for violation of California’s false
advertising law (FAL) (Bus. & Prof. Code, § 17500 et seq.), violation of California’s
unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.), and violations of
Civil Code sections 2945.4 and 2945.45. The complaint also alleged a separate claim for
unfair competition against Sarpas and Melek.
                                             II.
         THE TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION
              The same day as the complaint was filed, the trial court issued a temporary
restraining order and order to show cause, pursuant to which, inter alia, USHA was
placed into a temporary receivership, defendants were required to disclose to the
Attorney General information regarding their assets, and officers of USHA were enjoined
from “spending, transferring, disbursing, encumbering, or otherwise dissipating any real
or personal property without prior Court approval.” Nazarzai was a director and the chief
financial officer of USHA.
              Nazarzai was served with the temporary restraining order about 3:30 p.m.
on July 14, 2009. About 5:27 p.m. that same day, Nazarzai withdrew $426,318 from an
undisclosed bank account.
              In October 2009, the trial court issued a preliminary injunction in
accordance with the temporary restraining order and continued the receivership. On
November 6, in response to the preliminary injunction’s requirement that he disclose
asset information, Nazarzai confirmed he had $370,540 in cash assets, but he did not
disclose the location of those funds.
                                            III.
                               THE FIRST TURNOVER ORDER
              On July 1, 2010, the trial court issued the following order requiring
Nazarzai to turn over $360,540 in cash (the first turnover order): “Defendant Zulmai
Nazarzai shall turn over to the Court all cash assets within his possession, custody or

                                             4
control, including, without limitation, all monies held in any financial account held in
whole or in part by or for Mr. Nazarzai, and all cash, including $360,540.00 of the
$370,540 in cash disclosed by Defendant on November 6, 2009. The cash shall be turned
over to the Court no later than noon on July 2, 2010; the monies held in financial
accounts shall be turned over no later than noon on July 2, 2010. [¶] Defendant shall turn
these assets over to the court appointed receiver (the Receiver), David J. Pasternak, Esq.,
who shall place them into one or more segregated and insured bank accounts. These
assets may not be used or dispersed for any purpose by anyone, including the Receiver,
without further order of this Court. Any interest accrued by these accounts shall be for
the benefit of the account. These assets, in the form of cash and/or certified check made
payable to ‘David Pasternak, Receiver,’ must be delivered to the offices of Pasternak,
Pasternak & Patton, A Law Corporation, 1875 Century Park East, Suite 2200, Los
Angeles, CA 90067-2523 no later than the time and date set forth in the preceding
paragraph.”
                                             IV.

                      CONTEMPT PROCEEDINGS AGAINST NAZARZAI
                        AND ENTRY OF JUDGMENT OF CONTEMPT

              After Nazarzai did not comply with the first turnover order, the Attorney
General applied ex parte to the trial court for an order to show cause why Nazarzai should
not be held in contempt. The court granted the Attorney General’s application and
ordered Nazarzai to appear to show cause why he should not be held in contempt of the
following orders of the court: (1) the July 13, 2009 temporary restraining order, by
failing to timely provide the required asset information and comply with the order
freezing assets; (2) the October 2009 preliminary injunction, by failing to timely provide
asset information; (3) the May 28, 2010 order granting the Attorney General’s motion to
compel, by failing to properly and completely respond to discovery; and (4) the first
turnover order, by failing to turn over to the receiver, inter alia, $360,540 in cash.

                                              5
              The court held a trial on the contempt charge against Nazarzai. On
December 7, 2010, the court issued its order and judgment on the contempt issue, which
stated, inter alia, that the court “heard and considered the contemnor[’]s evidence offered
as an explanation for the conduct and rejected it because it is not credible. The
contemnor’s explanation would require me to find that a thief existed among one or more
of the following persons: the good Samaritan who came to investigate Ms. Sheren’s
condition (witness David Legaspi); the paramedic, James August; Deputy James Gibson
of the Los Angeles Sheriff’s Department; employees of the towing Company who towed
and stored the car in question and California Highway Patrol Officers Joe Dominguez
and Toby Williams. [¶] I was able to observe and consider the demeanor of the witnesses
described above and find them credible and do not believe any of them saw or took the
black duffel bag containing the $360,540 in cash alleged to have been in the car. In fact,
I find beyond a reasonable doubt that the cash was not in the car and never was placed
into it for delivery to the Receiver. [¶] . . . After due consideration, I find, beyond a
reasonable doubt that the contemnor is guilty of contempt of court in violation of the
following subsection of section 1209(a) of the California Code of Civil Procedure: [¶]
Subsection 5-Disobedience of any lawful judgment order or process of the court. [¶] . . .
I further find, beyond a reasonable doubt that: [¶] (a) the contemnor had actual
knowledge of my order, [¶] and [¶] (b) the contemnor had the ability to comply with my
order, when it was given and continues to be able to comply with it, [¶] and [¶] (c) the
contemnor has, and continues to, willfully disobey my order. [¶] . . . The contemnor is
sentenced to pay a fine of $1,000.00 and to be confined in the County Jail until the
contemnor performs the following act, or until the conclusion of the underlying
proceeding: Turn over to the Receiver . . . $360,540.00 of the $370,540 in cash disclosed
by the contemnor on November 6, 2009. This sentence shall run consecutive to the
contemnor being sentenced to a separate 5 days in the county jail for his willful
disobedience of my order to turn over the cash by noon of 07/02/2010. [¶] Execution of

                                               6
the sentence of the Court is not stayed, and the contemnor is ordered to pay the fine and
to be taken into custody forthwith.” Nazarzai was taken into custody and remains in
custody.
                                             V.

 THE TRIAL COURT FINDS DEFENDANTS LIABLE FOR VIOLATION OF THE UCL AND FAL;
                 JUDGMENT IS ENTERED AGAINST DEFENDANTS.
              At the March 2012 bench trial on the complaint, the Attorney General only
prosecuted the first two of the five causes of action, for violations of the UCL and FAL.
In its statement of decision, the trial court stated it found defendants’ “boiler-room sales
tactics . . . not only were likely to deceive members of the public, but were designed and
intended to deceive members of the public.” The court found that defendants violated the
UCL and FAL and that “USHA took in $2,047,041.86 from consumers for its purported
loan modification service.”
              The court found USHA, Sarpas, and Nazarzai jointly and severally liable
for the full amount of restitution; Sheren was held to be jointly and severally liable for
$147,869 of the full amount of restitution. The court also found USHA, Sarpas, and
Nazarzai jointly and severally liable for civil penalties of $2,047,041, and defendants
jointly and severally liable for an additional award in the amount of $360,540.
              On July 23, 2012, judgment was entered, stating, inter alia, that defendants
violated Business and Professions Code sections 17200 and 17500; that “each and every
customer, client, or person . . . who paid a fee for loan modification services to USHA
and/or WeBeatAllRates.Com during the period January 1, 2008 to July 14, 2009, will be
contacted and offered full restitution of all funds paid by” them; and that “Defendants
shall make complete and full restitution to each Eligible Consumer who requests same,
up to a total of $2,047,041.86.” The judgment also stated that USHA, Sarpas, and
Nazarzai were jointly and severally liable to pay civil penalties in the amount of

                                              7
$2,047,041 and that defendants were jointly and severally liable to pay additional civil
penalties in the amount of $360,540.
                                             VI.

 WRIT OF EXECUTION OF MONEY JUDGMENT IS ISSUED; THE TRIAL COURT GRANTS THE
         ATTORNEY GENERAL’S REQUEST FOR A SECOND TURNOVER ORDER;
            NAZARZAI APPEALS FROM THE SECOND TURNOVER ORDER.
                On December 7, 2012, the Attorney General obtained a writ of execution
on the money judgment which, as it pertained to Nazarzai, was for $2,407,581 in civil
penalties. The trial court denied Nazarzai’s motion to be released from custody. The
court explained that pursuant to the court’s December 2010 order and judgment finding
Nazarzai in contempt, inter alia, Nazarzai was to remain in jail until he turned over the
funds required by the first turnover order or until the conclusion of the underlying
            3
proceeding. The court stated the proceedings had not yet concluded because Nazarzai’s
codefendants had appealed from the judgment and their appeals were pending.
                On the same date, the trial court also granted the Attorney General’s
application for a second turnover order (the second turnover order) modifying the first
turnover order in light of the judgment entered and the writ of execution of the money
judgment that had been issued, and ordered as follows: “Defendant Zulmai Nazarzai
shall turn over to the Sheriff of Orange County, as Levying Officer, no later than 12 noon
on January 2, 2013 the $360,540 in cash disclosed by Defendant on November 6, 2009.
The receipt of these funds, as defined below, shall relieve Mr. Nazarzai of any further
obligation to comply with the Court’s previous Order of July 1, 2010 directing him to
turn over these same funds to the Court. [¶] The funds may be provided in cash, certified
check payable to the Attorney General of the State of California, or by any other means
approved by the People.” The court further ordered, “[o]nce the funds are received by
       3
          During the contempt trial in November 2010, the court explained to Nazarzai
that under section 1219 of the Code of Civil Procedure, he was at risk of staying in jail
until he complied with a turnover order.

                                              8
the Sheriff, Mr. Nazarzai shall no longer be in contempt of the July 1, 2010 order,
provided, however, if the funds are in any form other than cash, they will not be
‘received’ until the funds are collected, verified, and secured by the financial institution
into which they are deposited by the People.”
              Nazarzai appealed from the second turnover order. The Attorney General
filed a motion to strike portions of Nazarzai’s reply brief, which we address post.

                                       DISCUSSION
              In this appeal, Nazarzai solely challenges the trial court’s issuance of the
second turnover order. Nazarzai’s challenge is without merit. We apply general
appellate principles, namely, that we presume the correctness of the trial court’s order
and Nazarzai must affirmatively show error. (Ketchum v. Moses (2001) 24 Cal. 4th 1122,
1140-1141.)
              Section 699.040 of the Code of Civil Procedure provides that a judgment
creditor may seek a turnover order from the court, following the issuance of a writ of
execution, stating in its entirety: “(a) If a writ of execution is issued, the judgment
creditor may apply to the court ex parte, or on noticed motion if the court so directs or a
court rule so requires, for an order directing the judgment debtor to transfer to the levying
officer either or both of the following: [¶] (1) Possession of the property sought to be
levied upon if the property is sought to be levied upon by taking it into custody. [¶]
(2) Possession of documentary evidence of title to property of or a debt owed to the
judgment debtor that is sought to be levied upon. An order pursuant to this paragraph
may be served when the property or debt is levied upon or thereafter. [¶] (b) The court
may issue an order pursuant to this section upon a showing of need for the order. [¶]
(c) The order shall be personally served on the judgment debtor and shall contain a notice
to the judgment debtor that failure to comply with the order may subject the judgment
debtor to arrest and punishment for contempt of court.”

                                              9
              Nazarzai contends the trial court erred in issuing the second turnover order
because there was no “showing of need for the turnover order,” as required by Code of
Civil Procedure section 669.040, subdivision (b). He argues the first turnover order is
“identical” to the second turnover order. A comparison of the first turnover order with
the second turnover order, however, shows they are not identical and that the latter order
necessarily modified the former order in light of procedural developments in the case.
              Specifically, the second turnover order directs Nazarzai to deliver the same
amount of cash ($360,540), which is the subject of the first turnover order, to the Orange
County Sheriff as the levying officer, in accordance with the issuance of the writ of
execution of the money judgment. As judgment against defendants had been entered
since the issuance of the first turnover order and collection efforts were already
underway, the second turnover order directed Nazarzai to deliver the cash to the sheriff
instead of the court-appointed receiver, whose services at this stage of the litigation were
no longer necessary. The second turnover order expressly stated that the sheriff’s receipt
of those funds “shall relieve Mr. Nazarzai of any further obligation to comply” with the
first turnover order. It further stated that, upon the sheriff’s receipt of the funds, Nazarzai
would no longer be in contempt of the first turnover order. As the second turnover order
made necessary adjustments to the first turnover order in light of procedural
developments in this case, there was a showing of need for it within the meaning of Code
of Civil Procedure section 699.040, subdivision (b).
              In an effort to show the absence of a need for the second turnover order, in
his opening brief, Nazarzai quotes portions of the trial court’s discussion with counsel
during the hearing on the application for that order, in which the court expressed concern
about whether there was a need for the second turnover order. “‘Because we review the
correctness of the order, and not the court’s reasons, we will not consider the court’s oral
comments or use them to undermine the order ultimately entered. [Citations.] Here,
where the trial court was not required to prepare a statement of decision or explain its

                                              10
reasons for [issuing the second turnover order], it is especially important to refrain from
using the court’s oral comments as a basis for reversal. In that situation, reviewing the
trial court’s oral comments would in effect require the trial court either to prepare a
statement of decision where none is required or to say nothing during argument to avoid
creating grounds for impeaching the final order. We decline to place the trial courts in
such an untenable position.’” (Pellegrino v. Robert Half Internat., Inc. (2010) 182
Cal. App. 4th 278, 293-294.)
              Nazarzai also contends the second turnover order “violates all principles of
res judicata.” (Boldface & capitalization omitted.) In his opening brief, Nazarzai states:
“The granting of the [first] turnover order, still in effect to this date, was appealable. It is
a final order to which the principles of res judicata apply. It was and is improper to
re-litigate the issues presented by it and the second turnover order of 2012 was prohibited
by the doctrine of res judicata.”
              Under the principles of res judicata or claim preclusion, a prior judgment
bars a subsequent lawsuit on the same cause of action between the parties or their privies.
(Busick v. Workmen’s Comp. Appeals Bd. (1972) 7 Cal. 3d 967, 972-973.) Claim
preclusion prevents relitigation of issues that were decided, or could have been litigated,
in the prior lawsuit. (Id. at p. 975.) In contrast, the doctrine of collateral estoppel or
issue preclusion bars relitigation only of the issues actually decided in the prior lawsuit.
(Mooney v. Caspari (2006) 138 Cal. App. 4th 704, 717.) Claim preclusion bars a
subsequent lawsuit if three elements are established: (1) the prior lawsuit resulted in a
final judgment on the merits; (2) the lawsuit sought to be barred is on the same cause of
action as the prior lawsuit; and (3) the party against whom claim preclusion is sought was
a party or in privity with a party to the prior lawsuit. (Busick v. Workmen’s Comp.
Appeals Bd., supra, at p. 974.)

                                               11
              The first turnover order did not constitute a final judgment on the merits.
The trial court’s issuance of the second turnover order in the same action does not violate
the principles of res judicata or collateral estoppel.
              Nazarzai argues the second turnover order is erroneous because the cash
that is the subject of the second turnover order constitutes intangible property that is not
subject to levy within the meaning of Code of Civil Procedure section 699.040.
Section 699.040 is part of the Enforcement of Judgments Law (Code Civ. Proc.,
§§ 680.010-724.260) which is “a comprehensive scheme governing the enforcement of
all civil judgments in California.” (Imperial Bank v. Pim Electric, Inc. (1995) 33
Cal. App. 4th 540, 546.) Section 699.040 does not distinguish between intangible and
tangible property—it only refers to “property,” which is defined in Code of Civil
Procedure section 680.310 to include personal property. Tangible personal property is
defined in Code of Civil Procedure section 680.370 to include “money.” Furthermore,
Code of Civil Procedure section 695.010, subdivision (a) provides: “Except as otherwise
provided by law, all property of the judgment debtor is subject to enforcement of a
money judgment” (italics added), and Code of Civil Procedure section 699.710 further
provides: “Except as otherwise provided by law, all property that is subject to
enforcement of a money judgment pursuant to Article 1 (commencing with
Section 695.010) of Chapter 1 is subject to levy under a writ of execution to satisfy a
money judgment.”
              Code of Civil Procedure section 699.720, subdivision (a) lists the “types of
                                                                                               4
property” that are not subject to execution and that list does not include cash or currency.

       4
           Code of Civil Procedure section 699.720 provides in its entirety: “(a) The
following types of property are not subject to execution: [¶] (1) An alcoholic beverage
license that is transferable under Article 5 . . . . [¶] (2) The interest of a partner in a
partnership or member in a limited liability company if the partnership or the limited
liability company is not a judgment debtor. [¶] (3) A cause of action that is the subject of
a pending action or special proceeding. [¶] (4) A judgment in favor of the judgment

                                              12
(See Ahart, Cal. Practice Guide: Enforcing Judgments and Debts (The Rutter Group
2013) ¶ 6:317, p. 6D-4 (rev. # 1, 2011) [“Subject to important exceptions and
qualifications noted below [(Code of Civil Procedure section 699.720, subdivisions (a) &
(b))], all property of the judgment debtor subject to enforcement of a money judgment
[citation], is subject to levy under writ of execution”].)
              Nazarzai cites Palacio Del Mar Homeowners Assn., Inc. v. McMahon
(2009) 174 Cal. App. 4th 1386, in support of his argument that cash is not subject to levy
under a writ of execution. Palacio Del Mar Homeowners Assn., Inc. v. McMahon,
however, did not apply Code of Civil Procedure section 699.040, and did not hold that
cash is excluded from levy pursuant to that statute.
              In his reply brief, Nazarzai asserts, “[t]he People openly admitted at the
time of the hearing on the motion for [the] second turnover order that the sole reason they
sought the second turnover order was so they could seek a second, duplicative contempt
should Mr. Nazarzai ever be released from custody on the first contempt” and that such a
plan would unconstitutionally subject Nazarzai to double jeopardy.
              The Attorney General has moved to strike portions of Nazarzai’s reply
brief, stating, “[i]n his reply, [Nazarzai] provides for the first time argument and citation
in support of his position that double jeopardy barred the second order, even though
double jeopardy concerns are irrelevant because the order itself is not a second
prosecution. In doing so he unfairly deprives the People of an opportunity to refute his

debtor prior to the expiration of the time for appeal from the judgment or, if an appeal is
filed, prior to the final determination of the appeal. [¶] (5) A debt (other than earnings)
owing and unpaid by a public entity. [¶] (6) The loan value of an unmatured life
insurance, endowment, or annuity policy. [¶] (7) A franchise granted by a public entity
and all the rights and privileges of the franchise. [¶] (8) The interest of a trust
beneficiary. [¶] (9) A contingent remainder, executory interest, or other interest in
property that is not vested. [¶] (10) Property in a guardianship or conservatorship estate.
[¶] (b) Nothing in subdivision (a) affects or limits the right of the judgment creditor to
apply property to the satisfaction of a money judgment pursuant to any applicable
procedure other than execution.”

                                              13
argument, in contradiction to well-established California law.” We deny the Attorney
General’s motion because Nazarzai’s double jeopardy argument is without merit.
              Both the federal and state Constitutions prohibit placing a person in
jeopardy twice for the same offense. (U.S. Const. 5th Amend.; Cal. Const., art. I, § 15.)
The double jeopardy clause “protects only against the imposition of multiple criminal
punishments for the same offense.” (Hudson v. United States (1997) 522 U.S. 93, 99.)
              Even were we to assume double jeopardy protections attach in this
procedural context, the record does not reflect the trial court imposed multiple criminal
punishments for the same offense. We therefore do not consider Nazarzai’s double
jeopardy argument further.

                                      DISPOSITION
              The postjudgment order is affirmed. The Attorney General shall recover
costs on appeal.

                                                 FYBEL, J.

WE CONCUR:

ARONSON, ACTING P. J.

THOMPSON, J.

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