Court Opinion

ID: 9297244
Source: CourtListenerOpinion
Date Created: 2022-11-30 00:01:54.78973+00
Date Added: 2024-06-11T17:13:24.992864
License: Public Domain

Filed 11/29/22 Madison v. Spielfogel CA2/5
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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

                      SECOND APPELLATE DISTRICT

                                    DIVISION FIVE

 KYLE MADISON et al.,                                             B314272

          Plaintiffs and Appellants,                              (Los Angeles County
                                                                  Super. Ct.
          v.                                                      No. BC626872)

 DANIEL J. SPIELFOGEL,

          Defendant and Respondent.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Rupert A. Byrdsong, Judge. Affirmed.
     Lyle R. Mink for Plaintiffs and Appellants.
     Nemecek & Cole, Jonathan B. Cole, Marshall R. Cole, and
Daniel L. Reback for Defendant and Respondent.
       Plaintiffs and appellants Kyle Madison and Marjan
Madison (the Madisons) sued defendant and respondent Daniel
Spielfogel (Spielfogel), an attorney defending Michael Theodore
(Theodore) in a separate suit brought by the Madisons. The
Madisons, in their action against Spielfogel, asserted he was
liable for conversion because he wrongfully received payments
from Theodore that were drawn on accounts into which Theodore
had deposited some funds misappropriated from the Madisons.
In this appeal from the trial court’s grant of Spielfogel’s motion
for summary judgment, we consider whether the Madisons raised
a triable issue of fact as to whether the money Spielfogel received
rightly belonged to them.

                         I. BACKGROUND
      In 2005, the Madisons agreed with Theodore to purchase
and remodel “Casa W,” an investment property in Cabo San
Lucas, Mexico, that was adjacent to “Casa Theodore,” a rental
property Theodore already owned. Theodore and the Madisons
created a limited liability company—Casa W, LLC (the LLC)—to
purchase, renovate, and operate Casa W.
      Over the next several years, the relationship between
Theodore and the Madisons deteriorated as construction costs
ballooned and rental incomes disappointed the parties’ initial
expectations. Theodore requested additional funds from the
Madisons, and the Madisons began depositing funds into an
escrow account because they felt Theodore was not providing
them with sufficient information to justify the amounts
requested. Theodore eventually changed the locks on Casa W to
prevent the Madisons from accessing the house.

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       The Madisons sued Theodore and the LLC in 2011 (we
refer to this suit as the underlying action), and Spielfogel
represented Theodore and the LLC from inception of the action
through judgment. The Madisons subsequently sued others who
had some connection to the underlying action, including
Spielfogel.1
       Spielfogel moved to strike the lawsuit against him
pursuant to the anti-SLAPP statute (Code Civ. Proc., § 425.16).
The trial court denied that motion and this court affirmed,
finding the Madisons’ suit did not arise from activity protected by
the anti-SLAPP statute but cautioning that “[o]ur narrow
holding . . . should not be understood to determine that the
Madisons’ cause of action against Spielfogel has merit or that
Spielfogel lacks other remedies if the Madisons’ claim is frivolous
or abusive.” (Madison v. Spielfogel (July 20, 2018, B280588)
[nonpub. opn.] (Spielfogel I).)
       With the matter again before us on appeal from summary
judgment, we summarize only the facts pertinent to resolving
this appeal.

      A.    The Underlying Action
      Following a 77-day bench trial, the trial court found, among
other things, that Theodore deposited the LLC’s rental income
into his own accounts and commingled the LLC funds with his
own personal funds (including income from his investment

1
      The operative complaint in this case also includes a
conversion claim against one of Theodore’s expert witnesses,
Thomas Pastore, and his firm, Sanli Pastore & Hill, Inc. The
Madisons separately sued the court-appointed liquidator who
took over Casa W in a separate action.

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property, Casa Theodore). The trial court ruled in favor of the
Madisons on most of their claims, including breach of contract,
breach of fiduciary duty, breach of the implied covenant of good
faith and fair dealing, and fraud, and ordered an accounting. 2
The trial court determined, however, that Theodore was not
liable for conversion because there was no “identifiable fund or
corpus” that he “had an obligation to keep intact or [from which
he had an obligation to] deliver the specific money in question.”
       The trial court awarded the Madisons a total of $3,956,750
in damages. Both the Madisons and Theodore appealed that
judgment.

       B.    The Madisons’ Conversion Claim Against Spielfogel
       The Madisons asserted a single claim for conversion
against Spielfogel. The Madisons alleged Theodore paid
Spielfogel approximately $309,295 “from bank accounts that
contained the undistributed LLC funds due to the Madisons” and
continued to pay Spielfogel from these accounts.
       Spielfogel moved for summary judgment of the conversion
claim against him. He argued the Madisons could not establish
all the elements of conversion because Theodore paid for legal
services using a credit card issued in his name, Spielfogel
received payment from the credit card company, and Spielfogel
had no knowledge of how Theodore was paying his credit card
bills. Spielfogel also argued the claim was barred by res judicata
and collateral estoppel because it was based on the Madisons’
conversion claim against Theodore, which the trial court rejected

2
      The trial court ruled in favor of the Madisons on each claim
asserted in Theodore’s cross-complaint.

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in the underlying action. The Madisons, relying on a declaration
from certified fraud examiner Anna Leh, argued they could prove
conversion because Theodore made payments on the American
Express card he used to pay Spielfogel using funds from personal
accounts into which he had deposited Casa W rental income.
      The trial court granted Spielfogel’s motion for summary
judgment. The trial court agreed with the Madisons that res
judicata and collateral estoppel did not apply, but the court
determined the Madisons still could not establish conversion.
Doubting a conversion claim properly lies under the
circumstances (“when [Theodore] pays for his legal bills with a
credit card, . . . how is that converting the funds out of . . . the
LLC account?”), the court found Spielfogel was entitled to his
fees.

                           II. DISCUSSION
       We will assume for purposes of this appeal (and contrary to
the trial court’s ruling in the underlying case) that Theodore
converted funds belonging to the Madisons. There is still no
material dispute of fact requiring trial on the Madison’s
conversion claim against Spielfogel. We shall elaborate, but they
have not adduced substantial evidence (Sangster v. Paetkau
(1998) 68 Cal.App.4th 151, 162-163) that could support a
conclusion that the money Spielfogel received belonged to them.
       “As it has developed in California, the tort [of conversion]
comprises three elements: ‘(a) plaintiff’s ownership or right to
possession of personal property, (b) defendant’s disposition of
property in a manner inconsistent with plaintiff’s property rights,
and (c) resulting damages.’ [Citations.] Notably absent from this
formula is any element of wrongful intent or motive; in

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California, conversion is a ‘strict liability tort.’ [Citations.]”
(Voris v. Lampert (2019) 7 Cal.5th 1141, 1150 (Voris).) Subject to
exceptions we need not discuss here, a recipient of converted
property may be liable for conversion. (Regent Alliance Ltd. v.
Rabizadeh (2014) 231 Cal.App.4th 1177, 1181; Oakdale Village
Group v. Fong (1996) 43 Cal.App.4th 539, 546, 549.)
       Although “the applicability of the conversion tort to a claim
for money . . . was once the matter of some controversy,
California law now holds that property subject to a conversion
claim need not be tangible in form; intangible property interests,
too, can be converted. [Citation.] But the law has been careful to
distinguish proper claims for the conversion of money from other
types of monetary claims more appropriately dealt with under
other theories of recovery. Thus, although our law has dispensed
with the old requirement that ‘each coin or bill be earmarked,’ it
remains the case that ‘money cannot be the subject of an action
for conversion unless a specific sum capable of identification is
involved.’ [Citations.]” (Voris, supra, 7 Cal.5th at 1151.) In
other words, where money is concerned, “the sort of wrong that
conversion is designed to remedy” is the “wrongful[ ] exercise[ ]
[of] dominion over a specifically identifiable pot of money that
already belongs to the [plaintiff].” (Id. at 1152-1153; accord Kim
v. Westmore Partners, Inc. (2011) 201 Cal.App.4th 267, 284 [“A
cause of action for conversion of money can be stated only where
a defendant interferes with the plaintiff’s possessory interest in a
specific, identifiable sum, such as when a trustee or agent
misappropriates the money entrusted to him”].)
       The Madisons’ theory that Theodore paid Spielfogel using
“specifically identifiable pot of money that already belong[ed]” to
them (Voris, supra, 7 Cal.5th at 1152-1153) rests on their claimed

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ability to trace Theodore’s payments to American Express as
having been made from accounts in which LLC funds were
deposited. That is not enough. Even if the Madisons can prove
which accounts Theodore used to pay his American Express bill,
it is still undisputed that the accounts Theodore used held funds
from various other sources, including his own rental property, in
addition to misappropriated funds from the Casa W project. On
the summary judgment record presented, there is accordingly no
substantial evidence on which a jury could rely to find the money
that Theodore used to pay American Express was their money,
which would be necessary to establish the first element of a
conversion claim even under the Madisons’ theory of conversion.3
(Voris, supra, at 1151 [“‘[a] cause of action for conversion of
money can be stated only where a defendant interferes with the

3
      In addition, the Madisons’ tracing analysis implicitly
recognizes that Theodore need not have paid his American
Express bill using funds belonging to the LLC. This, too, is a
problem for them because they cannot establish they had an
interest in the funds American Express credited to Spielfogel at
the precise moment those funds appeared in his account; funds
cannot turn out to be converted based on events occurring after a
defendant received them. (Farmers Ins. Exchange v. Zerin (1997)
53 Cal.App.4th 445, 452 [neither “legal title nor absolute
ownership of the property is necessary” to establish conversion,
but the plaintiff must “allege it is ‘entitled to immediate
possession at the time of conversion’”].) Put differently, the
additional problem for the viability of the Madisons’ conversion
claim is that they had no interest in Theodore’s line of credit with
American Express. (Compare Welco Electronics, Inc. v. Mora
(2014) 223 Cal.App.4th 202, 211 [conversion claim viable where
defendant wrongfully exercised of dominion over a cardholder’s
“credit balance with the credit card company”].)

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plaintiff's possessory interest in a specific, identifiable sum”].)
Indeed, were the contrary true, the Madisons would have a
triable conversion claim against anyone Theodore paid using his
American Express card during the relevant time—and that is
not, and cannot be, the law. Summary judgment was properly
granted for Spielfogel.

                        DISPOSITION
     The judgment is affirmed. Spielfogel shall recover his costs
on appeal.

    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                       BAKER, Acting P. J.

We concur:

      MOOR, J.

      KIM, J.

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