Court Opinion

ID: 3005688
Source: CourtListenerOpinion
Date Created: 2015-09-30 00:02:41.982943+00
Date Added: 2024-06-11T12:46:27.413800
License: Public Domain

Filed 9/29/15 Santiago v. Anderson 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                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

MARIO DE SANTIAGO,
                                                                       G050430
     Plaintiff and Respondent,
                                                                       (Super. Ct. No. 30-2012-00583445)
         v.
                                                                       OPINION
BRUCE C. ANDERSON et al.,

     Defendants and Appellants.

                   Appeal from a judgment of the Superior Court of Orange County, Gail
Andrea Andler, Judge. Affirmed.
                   Richard V. McMillan for Defendants and Appellants.
                   La Jolla Law Group, Kent L. Sharp, and Brien J. O’Meara for Plaintiff and
Respondent.
                                          *                  *                  *

                   Bruce C. Anderson, Salvador Bracamontes, and Isela Ibarra appeal from a
judgment awarding Mario De Santiago $180,000 in joint and several damages against
them as coconspirators in a fraudulent scheme to invest in a Nevada gold mine, plus
$36,000 in loan carrying costs and $109,650 in prejudgment interest. Bracamontes
challenges the sufficiency of the complaint and the evidence to support that damages
figure in a default judgment against him. Defendants also challenge the allocation of
damages among them and assert various statutes of limitations precluded judgment for
plaintiff. Anderson, as the primary conspirator, also challenges the trial court’s $500,000
punitive damages award against him. As we explain, none of these contentions has merit,
and we therefore affirm the judgment.
                                               I
                   FACTUAL AND PROCEDURAL BACKGROUND
              In 2007, plaintiff decided to aid his brother, Joel De Santiago, in acquiring
a home in Delano, California because Joel’s credit was poor. Plaintiff purchased the
home in his name on his brother’s behalf, and Ibarra acted as the real estate agent for both
the buyer and the seller.
              Aware that plaintiff had substantial equity in the home and good credit,
Ibarra and her coconspirators, Anderson and Bracamontes, lured plaintiff into investing
in a Nevada gold and marble mine. Ibarra claimed she invested $150,000 of her own
money in the mine, and she told plaintiff to expect to triple his money on any funds he
invested. Plaintiff agreed to meet with her about the mine, and Ibarra brought
Bracamontes to their first meeting in October 2007. Both Ibarra and Bracamontes
claimed they put $150,000 into the mine, which was doing business as Kinsley
Resources, Inc. (Kinsley), and they promised again a 300 percent return on his
investment and that he could turn those profits in as little as a year.
              The duo met plaintiff again in November 2007, continuing to pique his
interest, and they arranged a third meeting in December 2007 with Anderson, Kinsley’s
owner. The trio showed him Kinsley’s business plan and a disc filled with supporting
data. They informed him the mine was worth billions of dollars, that he could triple his
money, and that they were in the process of selling interests to major stakeholders and

                                               2
obtaining institutional loans to develop the property. Anderson confirmed Ibarra and
Bracamontes both invested $150,000 of their own funds.
              When plaintiff expressed reluctance and noted he did not have that sum,
Ibarra and Anderson advised him to tap the equity in the home he just purchased. Ibarra
calculated plaintiff could draw out $193,000, invest $150,000 with defendants, and
service the loan with the remaining $43,000. Ibarra drew up the paperwork to obtain the
loan, plaintiff signed it, and plaintiff also signed the necessary security documents
Anderson presented to invest $150,000 in the mine. Plaintiff wired the $150,000 to
Kinsley as instructed by Anderson. Days later, Bracamontes obtained an additional
$20,000 loan from plaintiff based on the representations that he (Bracamontes) had ample
assets invested in the mine.
              Plaintiff contacted defendants periodically and they assured him they were
proceeding in developing the mine, making progress with major investors and lenders,
and that his patience would be rewarded handsomely. Unknown to plaintiff, however,
Anderson was not developing the property or securing institutional funding, but rather
swindling other individual investors like plaintiff. Plaintiff contacted Anderson in
February 2009 and he perpetuated the ruse, issuing an update letter that painted a rosy
picture that named institutional buyers and lenders who would make the mine a success.
Anderson assured plaintiff his investment was safe, he would triple his money, and that
major lenders and entities interested in purchasing the property were actively pursuing
Kinsley to develop the mine. None of these statements or those that induced plaintiff to
make his initial investment were true. Nor had Ibarra or Bracamontes or even Anderson
himself invested any money in the mine. Defendants continued to make misstatements
with monthly and yearly updates.
              As the trial court explained in its statement of decision, “Defendants
continually and repeatedly, over a period of years, both orally and in writing, represented
to plaintiff that the said investment was safe and secure, and that plaintiff was going to

                                              3
receive three times his investment. Ultimately, plaintiff received nothing and then filed
the [c]omplaint,” which Anderson and Ibarra answered, but Bracamontes defaulted.
Plaintiff’s complaint included allegations of securities fraud, intentional
misrepresentation and deceit, negligent misrepresentation, fraud, breach of fiduciary
duty, and breach of contract. The court found that defendants “were co-conspirators in a
scheme designed to defraud plaintiff into having him believe that plaintiff and defendants
were all a family, that plaintiff had more than enough money to invest in Kinsley
Resources, Inc. by taking out a second mortgage on his home, and to have plaintiff
believe that all defendant Anderson wanted to do was to help people. [¶] The Court
finds that defendant Anderson, with the assistance of defendants Ibarra and Bracamontes,
conspired to prey on plaintiff and that . . . defendants used their position of trust and their
misrepresentations to plaintiff in order to have him invest his money in defendants’
fraudulent scheme. This fraudulent scheme by defendants was established to the Court
by more than a preponderance of evidence, and even more than clear and convincing
evidence that defendants’ conduct was fraudulent, deceitful, and that their
misrepresentations resulted in plaintiff’s damages.”
                                               II
                                        DISCUSSION
A.     Default Judgment Against Bracamontes
              Bracamontes challenges the sufficiency of the complaint and the evidence
to support the default judgment against him. Review of a default judgment is limited to
questions of jurisdiction, sufficiency of the pleadings, and excessive damages. (Steven
M. Garber & Associates v. Eskandarian (2007) 150 Cal. App. 4th 813, 824.) A default
“confesses” the facts alleged in the complaint; accordingly, “they are treated as true” for
purposes of the default judgment. (Kim v. Westmoore Partners, Inc. (2011)
201 Cal. App. 4th 267, 281, italics omitted.) But if the facts “do not state any proper cause
of action, the default judgment in the plaintiff’s favor cannot stand.” (Id. at p. 282.)

                                               4
              On the breach of contract claim, Bracamontes contends that by failing to
specify the due dates on the sums plaintiff loaned him, plaintiff’s complaint failed to
allege the loans were overdue. But no special form of pleading is required. Plaintiff
alleged as to both the $20,000 and $10,000 loans that Bracamontes had breached his duty
to repay the loans; specifically, Bracamontes had “failed, and continues to fail, to payoff
the same.” These allegations asserted a breach of the loan agreements, and
Bracamontes’s failure to answer the complaint admitted the breach. Nothing more was
required.
              Bracamontes also argues the allegations in the complaint do not support the
$325,650 in joint and several damages the trial court awarded against him. “The relief
granted to the plaintiff, if there is no answer, cannot exceed that demanded in the
complaint . . . .” (Code Civ. Proc., § 580, subd. (a).) Bracamontes asserts the trial court’s
award of $36,000 in loan carrying costs was unfounded anywhere in the complaint. To
the contrary, however, plaintiff alleged in his complaint that $43,000 was necessary “to
service the loan” that defendants induced him to take out to invest in their scheme.1

       1       We note the trial court may have awarded plaintiff only $36,000 in carrying
costs instead of $43,000 because plaintiff spent $13,000 of the $193,000 of borrowed
home equity funds on home improvements. The remaining $180,000 went to defendants’
gold mine scheme, consisting of the $150,000 plaintiff invested in bogus mine securities
and the $20,000 and $10,000 loans he made to Bracamontes based on Bracamontes’s
claimed confidence in his own asserted investments in the gold mine. Of course, plaintiff
would not be entitled to carrying costs for the $13,000 he spent on home improvements.
Defendants argue the $36,000 in carrying costs should be reduced to account for monthly
home equity loan payments attributable to the $13,000, but they provide no explanation,
argument, citations to the record, or evidence to suggest the trial court did not already
factor in that sum by awarding plaintiff $36,000 instead of the complaint’s alleged
$43,000 in loan costs. Because we must make all presumptions in favor of the judgment
(Denham v. Superior Court (1970) 2 Cal. 3d 557, 564 (Denham)), plaintiffs have failed
their burden on appeal to demonstrate error requiring further reduction of the $36,000.
Consequently, their related argument for a reduced total sum of prejudgment interest
based on reduced carrying costs also fails.

                                             5
              Similarly, the total damage figure of $325,650 is supported by the
allegations of the complaint. Plaintiff did not specify a total or exact figure in his prayer
for damages, but instead simply that damages would “be proven at [the] time of trial or
judgment.” Nevertheless, a prayer for “damages according to proof” is sufficient to
support a default judgment award if specific damage amounts are alleged in the body of
the complaint. (Becker v. S.P.V. Construction Co. (1980) 27 Cal. 3d 489, 494.)
Plaintiff’s complaint alleged damages of at least $180,000 and as high as $185,000 based
on the home equity sums he withdrew to advance to the defendants, not including the
servicing costs. Plaintiff also expressly sought prejudgment interest, and there is no
dispute that with prejudgment interest, the $180,000 loan amount and $36,000 in carrying
costs resulted in at least $325,650 in damages. The complaint’s factual allegations,
admitted as true by Bracamontes’s default, therefore support the damage award and
Bracamontes’s challenge fails.

B.     Damages Allocation Among Defendants; Statutes of Limitations
              Ibarra and Anderson contend they were not liable jointly and severally on
deceit or misrepresentation grounds for the $30,000 plaintiff loaned to Bracamontes.
Ibarra and Bracamontes raise the seemingly unrelated claim that certain causes of action
against them were barred by applicable statutes of limitations. As we explain, the trial
court’s conspiracy finding renders each of these disparate challenges meritless.
              First, it is true that plaintiff dismissed Ibarra and Anderson from his fifth
cause of action against Bracamontes for breach of contract for failure to repay the
$30,000 in loans he extended to Bracamontes. But that does not mean the trial court
could not find Ibarra and Anderson liable for the $30,000 based on plaintiff’s allegations
of deceit and misrepresentation. Simply put, the trial court found that the loan to
Bracamontes was part and parcel of the three defendants’ goldmine scheme to defraud
plaintiff. As the trial court observed, “Mr. Anderson preyed on Mr. De Santiago with the

                                              6
able assistance of Ms. Ibarra and Mr. Bracamontes, who used their position of trust, had
used their ethnicity by saying, basically: We Mexicans need to do this in order to get
ahead; by saying: We’ll be family. We’re a part of it. You can be a part of it. We’re
investing our money. We invested our family’s money. [¶] This was a scheme. It was
established to the court by more than the burden of proof . . . .”
              The trial court reasonably could conclude plaintiff would not have made the
loans to Bracamontes without Ibarra’s and Anderson’s false assurances that the gold mine
was a foolproof investment. As alleged in the complaint, Bracamonte induced plaintiff to
lend him the $30,000 based on Bracamonte’s guaranteed ability to repay the amount
based on his (Bracamonte’s) mine investment. These assurances would have carried no
weight without Ibarra and Anderson vouching for the mine. The trial court also could
conclude the $30,000 in loans was not a distinct and separate fraud perpetrated solely by
Bracamontes, but rather an integral part of a larger fraud to extract as much money as
possible from plaintiff. In particular, defendants worked together to extol the false
financial virtues of the mine, and plaintiff’s loans to Bracamontes followed quickly on
the heels of his mine investment. This coordinated timing suggests a concerted effort by
the defendants to get plaintiff to give Anderson $150,000 on December 14, 2007, in
return for worthless mine securities and then almost immediately to loan Bracamontes
$20,000 on December 29, 2007, based on his strong financial position in the mine.
              Additionally, Ibarra and Anderson continued to reassure plaintiff about the
mine, which the trial court could conclude induced plaintiff to lend Bracamontes the
remaining $10,000 in August 2008. It is unnecessary, and often impossible, “‘to show
that the parties met and actually agreed’” or “‘arranged a detailed plan’” constituting a
conspiracy. (People v. Steccone (1950) 36 Cal. 2d 234, 238.) Instead, the “‘conspiracy
may be inferred from the conduct, relationship, interests, and activities of the alleged
conspirators before and during the alleged conspiracy.’” (People v. Rodrigues (1994)
8 Cal. 4th 1060, 1134-1135.) “Whether an individual conspirator’s act was committed in

                                              7
furtherance of the conspiracy is a question of fact.” (People v. Cooks (1983)
141 Cal. App. 3d 224, 312.) Here, the trial court found the loans Bracamontes obtained
were part of the larger conspiracy to defraud plaintiff, and we are in no position to
second-guess that factual determination. Each individual in a fraudulent conspiracy is
jointly and severally liable for the full amount of damages. (Younan v. Equifax (1980)
111 Cal. App. 3d 498, 508; Saporta v. Barbagelata (1963) 220 Cal. App. 2d 463, 474.) The
trial court therefore properly included the $30,000 in loans as damages against all three
defendants.
              Similarly, the trial court’s conspiracy finding defeats Ibarra’s and
Bracamontes’s statutes of limitations defenses. Ibarra notes that plaintiff surmounted the
three-year statute of limitations for his fraud claim on his initial investment in the gold
mine in 2007 by pointing to later false assurances by the defendants that wealthy third
parties were about to buy into the mine, thereby continuing and concealing their scheme
and dissuading plaintiff from withdrawing his investment or suing earlier. Ibarra claims
that because plaintiff specified additional misstatements only by Anderson and
Bracamontes, her alleged participation in the initial $150,000 investment fraud fell
outside the three-year statute of limitations. (Code Civ. Proc., § 338.) To the contrary,
however, there was no evidence Ibarra withdrew from the conspiracy to defraud plaintiff
or that the conspiracy had terminated.
              Whether a particular conspiracy has ended is a question for the trier of fact
based on the “‘unique circumstances and the nature and purpose of the conspiracy.’”
(People v. Hardy (1992) 2 Cal. 4th 86, 143.) The trial court reasonably could conclude
the nature of the conspiracy required a continuing effort to deceive plaintiff about the
mine’s prospects because defendants had promised plaintiff a quick return on his
investment. Accordingly, Ibarra’s participation in the conspiracy rendered her liable for
the acts of her coconspirators continuing the fraud. Because a fraud action is “not
deemed to have accrued until the discovery, by the aggrieved party, of the facts

                                              8
constituting the fraud” (Code Civ. Proc., § 338, subd. (d)), the statute of limitations did
not expire for any of the members of the conspiracy.
              Bracamontes’s invocation of the statute of limitations for a breach of
contract similarly fails. He asserts that because his initial loan was due on January 28,
2008, and plaintiff did not file his complaint until July 13, 2012, plaintiff’s breach of
contract claim against him fell outside the four-year statute of limitations. (Code Civ.
Proc., § 337.) But the trial court awarded damages against defendants based on their
participation in a fraudulent scheme to defraud plaintiff, not breach of contract. As
noted, the statute of limitations for fraud was tolled by defendants’ continuing
misrepresentations. Moreover, by defaulting Bracamontes waived any limitations period,
which, as an affirmative defense, “must be affirmatively pleaded, by demurrer or answer.
If it is not so pleaded, its benefits are waived.” (43 Cal.Jur.3d (2015) Limitation of
Actions, § 229, fns. omitted.) Bracamontes’s challenge therefore fails.

C.     Punitive Damages Against Anderson
              Anderson challenges the $500,000 in punitive damages the trial court
awarded against him. He contends the trial court erroneously admitted evidence from the
gold mine’s bankruptcy reorganization showing the mine was worth $106 million and
that Anderson owned a 30 percent interest in the mine, in addition to any portion he
might inherit from his recently deceased father. Anderson contends the information was
irrelevant hearsay. But the bankruptcy schedules that Anderson signed as a co-owner of
the mine reflected comparatively small liabilities of $12 million, leaving a net worth of
$94 million, or more than $30 million for Anderson personally. The information
therefore was relevant to assessing Anderson’s financial condition. Anderson confirmed
these figures and his ownership percentage in his testimony at trial. Anderson argues the
trial court erroneously believed plaintiff had pleaded in his complaint that Anderson
operated the mine as his alter ego, but Anderson does not dispute the trial court’s implicit

                                              9
conclusion Anderson did so. We must presume the evidence supports this conclusion
(Denham, supra, 2 Cal.3d at p. 564), and therefore the schedules Anderson signed and
submitted under penalty of perjury were admissible as party admissions. (Evid. Code, §
1220.)
               Anderson also challenges the sufficiency of the evidence to support his
ability to pay the $500,000 award. When a defendant’s financial ability to pay is
measured in terms of net worth, punitive damage awards in excess of 10 percent of a
defendant's net worth are generally considered excessive. (Storage Services v.
Oosterbaan (1989) 214 Cal. App. 3d 498, 515; see Merlo v. Standard Life & Acc. Ins. Co.
(1976) 59 Cal. App. 3d 5, 18 [30 percent of net worth held “so greatly disproportionate
. . . that [award was] presumptively based upon passion or prejudice”].)
               Net worth, however, is not a definitive standard or even required, since that
figure is easily manipulated, including here where Anderson ignored discovery
concerning his finances. (Lara v. Cadag (1993) 13 Cal. App. 4th 1061, 1064-1065 &
fn. 3.) In Adams v. Murakami (1991) 54 Cal. 3d 105 (Adams ), the Supreme Court held
“meaningful” evidence of a defendant’s financial condition is necessary to sustain an
award of punitive damages and the burden rests on the plaintiff to introduce such
evidence. (Id. at pp. 108-109.) Absent the evidence, there is no way to determine
whether an award is disproportionate to the defendant’s ability to pay, and therefore
excessive. (Id. at p. 109.) The purpose of punitive damages “is to deter, not to destroy.”
(Id. at p. 112.)
               Adams was a personal injury case in which no “financial evidence of any
kind” was introduced at trial. (Adams, supra, 54 Cal.3d at p. 116, fn. 7.) That is not the
case here, where Anderson verified in his testimony his ownership share in the gold mine
and that the value of his share exceeded $30 million. The trial court reasonably could
impose a punitive damages award of less than two percent of the very asset Anderson
used to swindle plaintiff. The trial court also reasonably could decline to reward

                                             10
Anderson’s discovery recalcitrance with a lower punitive damages award, and in light of
the undisputed evidence his holdings exceeded $30 million, the award was not excessive.
                                          III
                                    DISPOSITION
             The judgment is affirmed. Respondent is entitled to his costs on appeal.

                                                ARONSON, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

IKOLA, J.

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