Court Opinion

ID: 5128910
Source: CourtListenerOpinion
Date Created: 2021-11-23 20:02:48.351638+00
Date Added: 2024-06-11T08:23:09.701072
License: Public Domain

Filed 11/23/21 Golden State Pharmaceuticals v. Yee 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   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

GOLDEN STATE                                                 B308625
PHARMACEUTICALS LLC,
                                                             (Los Angeles County
         Plaintiff and Respondent,                           Super. Ct. No. BC720093)

         v.

BETTY T. YEE, CALIFORNIA
STATE CONTROLLER,

         Defendant and Appellant.

      APPEAL from a judgment of the Superior Court of Los
Angeles County, Gregory Keosian, Judge. Reversed.
      Xavier Becerra and Rob Bonta, Attorneys General, Thomas
S. Patterson, Senior Assistant Attorney General, Mark R.
Beckington and Lara Haddad, Deputy Attorneys General, for
Defendant and Appellant.
      Law Offices of George A. Shohet, George A. Shohet and
Teri Zimon, for Plaintiff and Respondent.

                                                     1
                     I.    INTRODUCTION

      Golden State Pharmaceuticals LLC (Golden State), a
cancelled limited liability corporation, filed claims with the
California State Controller (the Controller) for money the
Controller held under the California Unclaimed Property Law
(UPL). When the Controller failed to act on the claims, Golden
State brought a civil action under the UPL to recover the money.
The trial court granted Golden State’s motion for summary
judgment, awarding it $121,989.13. The Controller appeals. We
reverse.

                     II.   BACKGROUND1

A.    Golden State

      Marisa Schermbeck Nelson worked as a personal assistant
to Doctor Munir Uwaydah from 2000 to June 2010. Uwaydah
owned and controlled several companies that were held in other
persons’ names to hide his ownership and control from creditors,
insurance investigators, and government agencies. During
Nelson’s employment with Uwaydah, Uwaydah directed her to
put her name as owner, officer, or manager of various
corporations or limited liability companies even though he owned
and solely controlled the operation of those entities.

1     “Consistent with our standard of review of orders granting
summary judgment, we will recite the historical facts in the light
most favorable to . . . the nonmoving party. [Citation.]” (Light v.
Department of Parks & Recreation (2017) 14 Cal.App.5th 75, 81.)

                                 2
        On March 27, 2007, Golden State filed its Articles of
Organization with the California Secretary of State. It was to be
managed by one manager. Uwaydah owned Golden State yet
directed Nelson to put her name as Golden State’s owner. Nelson
also was designated as the owner of a bank account associated
with Golden State. At Uwaydah’s direction and until her
employment with Uwaydah ended in June 2010, Nelson moved
money in and out of the Golden State bank account.
        On July 9, 2009, Golden State informed the Secretary of
State that Holger Blank was its sole manager. On
October 1, 2010, Blank filed Golden State’s Certificate of
Cancellation with the Secretary of State. On December 16, 2016,
Blank authorized Janek Hunt to act as Golden State’s Custodian
of Records in winding up Golden State’s affairs.
        On March 16, 2017, the Los Angeles County District
Attorney filed a complaint against Nelson and others for, among
other crimes, conspiring to commit insurance fraud in violation of
Penal Code sections 182, subdivision (a)(1) and 550, subdivision
(a)(6). The complaint alleged the insurance fraud was committed
between November 15, 2004, and February 20, 2015, and was
based, in part, on the operation of Golden State. On
July 26, 2017, Nelson pleaded guilty to that charge as stated in a
third amended felony complaint. As part of her plea, Nelson
testified that Uwaydah, who “was the true owner of Golden State
. . . created a list of prescription medications and insisted that
each patient seen at Frontline [a medical clinic also controlled by
Uwaydah] be prescribed all medications on the list or at least a
certain dollar amount . . . . The billing reflected that each patient
was essentially prescribed the same medication.” She added that
“[p]rescriptions would often be returned to the clinic or pharmacy

                                 3
and these medications would be relabeled with different patient
names and the insurance company would be re-billed for the
same medication. . . . [¶] . . . [¶] Pharmaceutical billing became
a lucrative part of the overall scheme.” In a declaration in
support of the Controller’s opposition to Golden State’s motion for
summary judgment, Nelson stated that to her knowledge, Golden
State operated under a fraudulent scheme from its founding to
her departure from Uwaydah’s employment in June 2010.
      On January 17, 2019, a Criminal Grand Jury of Riverside
County indicted Uwaydah, Hunt, and others for, among other
crimes, conspiring to knowingly make false or fraudulent claims
for payment of health care benefits in violation of Penal Code
sections 182, subdivision (a)(1) and 550, subdivision (a)(6). The
indictment alleged the conduct at issue occurred between
September 1, 2015, through and including September 1, 2018,
and was based, in part, on the operation of Golden State.

B.    The Insurance Claims

      Between May 2015 and June 2016, the Controller received
37 submissions from insurance companies and other entities for
insurance claim benefits, insurance claim reimbursements, and
workers’ compensation benefits that identified Golden State as
the owner of the submission proceeds. On January 17, 2017, the
Controller informed Golden State by letter that it had received
the 37 submissions and explained how Golden State could file a
claim for the money under the UPL.
      On March 9, 2017, Hunt, on behalf of Golden State, filed
claim forms with the Controller concerning the 37 submissions.
From October 2017 to February 2018, Zachary Peccianti, the

                                 4
Controller’s Bureau Chief, communicated with Hunt and Steven
Gardner, Golden State’s attorney, concerning documents
necessary to “complete the claim.”2
       On February 2, 2018, Golden State provided the Controller
with the final requested document and Peccianti e-mailed
Gardner that the Controller would evaluate Golden State’s claim
and advise it of the outcome. On February 7, 2018, Peccianti
e-mailed Gardner: “It appears that the company or the reported
owner of the property may be/ ha[s] been associated with some
litigation. We allow our legal office to make the final
determination in cases such as this. We are routing to their office
to make that determination. If the claim is approved the
claimant may authorize payment to be sent to your address. No
form is needed, just communication from Mr. Hunt stating these
are his wishes.”
       Thereafter, Gardner made several unsuccessful attempts to
find out the basis for the Controller’s hold on Golden State’s
claims. On March 26, 2018, Gardner e-mailed Peccianti stating
that he had contacted the Controller’s legal office and spoken
with the receptionist who told him that the office had a lot of
cases and “‘[w]e don’t know who it will be assigned to or when we
will get back to you.’” Gardner stated that based on the
communications between Peccianti and himself and Hunt, he
deemed Golden State’s claims to have been completed on
February 2, 2018. He demanded that Peccianti immediately
identify the problematic litigation that was delaying the
processing of Golden State’s claims. The Controller did not
respond to Gardner’s e-mail.

2      The Controller treated all claims on behalf of Golden State
as a single claim.

                                 5
      On August 30, 2018, Golden State filed its complaint
against the Controller to recover its claimed money under the
UPL. It moved for summary judgment. The trial court granted
the motion and, on August 3, 2019, entered judgment for Golden
State in the amount of $121,989.13. The Controller timely filed a
notice of appeal.

                      III.   DISCUSSION

A.    Standard of Review

       Our review of the trial court’s ruling on a motion for
summary judgment is governed by well-established principles.
“‘“A trial court properly grants a motion for summary judgment
only if no issues of triable fact appear and the moving party is
entitled to judgment as a matter of law. (Code Civ. Proc., § 437c,
subd. (c); see also id., § 437c, subd. (f) [summary adjudication of
issues].)”’” (State of California v. Allstate Ins. Co. (2009) 45
Cal.4th 1008, 1017.) “We review the trial court’s decision [on a
summary judgment motion] de novo, considering all of the
evidence the parties offered in connection with the motion (except
that which the court properly excluded) and the uncontradicted
inferences the evidence reasonably supports. [Citation.]”
(Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476; McDonald v.
Antelope Valley Community College Dist. (2008) 45 Cal.4th 88,
96–97 [suggesting de novo review of the applicability of equitable
tolling]; see Johnson v. City of Loma Linda (2000) 24 Cal.4th 61,
67–68 [holding the court of appeal erred by reviewing summary
judgment granted on the equitable defense of laches under the
“deferential abuse of discretion standard”].)

                                 6
       “In moving for summary judgment, a ‘plaintiff . . . has met’
his ‘burden of showing that there is no defense to a cause of
action if’ he ‘has proved each element of the cause of action
entitling’ him ‘to judgment on that cause of action. Once the
plaintiff . . . has met that burden, the burden shifts to the
defendant . . . to show that a triable issue of one or more material
facts exists as to that cause of action or a defense thereto. The
defendant . . . may not rely upon the mere allegations or denials’
of his ‘pleadings to show that a triable issue of material fact
exists but, instead,’ must ‘set forth the specific facts showing that
a triable issue of material fact exists as to that cause of action or
a defense thereto.’ (Code Civ. Proc., § 437c, subd. (o)(1).[3])”
(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.)

B.    UPL

      “‘“The [UPL] governs the state’s handling and disposition,
generally through the controller, of property such as bank
accounts and securities, held by entities such as banks, brokerage
firms, and insurance companies, the owners of which have not
acknowledged or claimed their interest in for several years,
generally three. Such property by statute escheats,
nonpermanently, and the holder must transfer it to the
controller.”’ [Citations.] ‘“The [UPL] is not a permanent or ‘true’
escheat statute. Instead, it gives the state custody and use of
unclaimed property until such time as the owner claims it. Its
dual objectives are ‘to protect unknown owners by locating them
and restoring their property to them and to give the state rather

3    All further statutory citations are to the Code of Civil
Procedure unless otherwise noted.

                                  7
than the holders of unclaimed property the benefit of the use of it,
most of which experience shows will never be claimed.’”’
[Citation.] Section 1540 sets forth the procedures for the filing
and processing of claims for escheated property.” (Casiopea
Bovet, LLC v. Chiang (2017) 12 Cal.App.5th 656, 661–662, fn.
omitted.)
      Under section 1540, a person who claims to be the owner of
property delivered to the Controller under the UPL may file a
claim for the property on a form the Controller prescribes.
(§ 1540, subd. (a).) The Controller must consider a claim within
180 days after it was filed to determine if the claimant is the
owner and provide written notice to the claimant if it denies the
claim in whole or in part. (§ 1540, subd. (b).) For purposes of
filing a claim under section 1540, an “owner” is “the person[4] who
had legal right to the property before its escheat . . . .” (§ 1540,
subd. (d).)
       If the Controller denies a claim filed under the UPL or fails
to make a decision on a claim within 180 days after the claim was
filed, the claimant may file a lawsuit to establish the claimant’s
claim. (§ 1541.) Such a lawsuit must be brought within 90 days
after the Controller’s decision denying the claim or within 270
days from the date the claim was filed if the Controller fails to
make a decision. (Ibid.)

4     “‘Person’ means any individual, business association,
government or governmental subdivision or agency, two or more
persons having a joint or common interest, or any other legal or
commercial entity, whether that person is acting in his or her
own right or in a representative or fiduciary capacity.” (§ 1501,
subd. (h).)

                                 8
C.    Analysis

      1.    Statute of Limitations

        The trial court impliedly ruled that Golden State did not
file its complaint within the time prescribed in section 1541, but
expressly ruled that the statute of limitations was equitably
tolled. The Controller contends that the court erred in applying
equitable tolling because Golden State failed to provide the
Controller with notice of its intent to litigate and failed to
conduct itself reasonably and in good faith. We disagree.
        Golden State filed its claims under the UPL on
March 9, 2017. The Controller did not deny those claims and
provide written notice to Golden State within 180 days of
March 9, 2017. Accordingly, section 1541 required Golden State
to file its complaint within 270 days of March 9, 2017—i.e., by
December 4, 2017. Instead, Golden State filed its complaint on
August 30, 2018, over 270 days after March 9, 2017, and outside
the statute of limitations. Thus, for Golden State to proceed with
its time-barred claim, it had to satisfy the elements of equitable
tolling. (See Turnacliff v. Westly (N.D. Cal. July 6, 2006) 2006
WL 1867721 *2.)
        “Equitable tolling is a judge-made doctrine ‘which operates
independently of the literal wording of the Code of Civil
Procedure’ to suspend or extend a statute of limitations as
necessary to ensure fundamental practicality and fairness.
[Citations.] [The California Supreme Court] has applied
equitable tolling in carefully considered situations to prevent the
unjust technical forfeiture of causes of action, where the
defendant would suffer no prejudice. [Citations.]” (Lantzy v.

                                 9
Centex Homes (2003) 31 Cal.4th 363, 370.) “Equitable tolling has
three elements: ‘timely notice, and lack of prejudice, to the
defendant, and reasonable and good faith conduct on the part of
the plaintiff.’ [Citation.]” (Structural Steel Fabricators, Inc. v.
City of Orange (1995) 40 Cal.App.4th 459, 464–465, fn. omitted.)
       Here, as the trial court found, Golden State demonstrated
all three elements of equitable tolling. First, Golden State gave
the Controller timely notice of their claims when it filed its
March 9, 2017, claims. Second, in opposition to Golden State’s
summary judgment motion, the Controller argued it “would be
prejudiced by tolling the statute of limitations,” but did not
explain how or adduce facts supporting its prejudice claim. It
does not argue on appeal that it would be prejudiced.
       Third, Golden State conducted itself reasonably and in good
faith in pursuing its claims. In October 2017, within the statute
of limitations, Peccianti contacted Hunt about documents the
Controller needed to consider Golden State’s claims. Thereafter,
both inside and outside the statute of limitations, Hunt and
Gardner communicated with Peccianti about those documents.
After Peccianti informed Gardner that Golden State’s claims had
been transferred to the Controller’s legal office because the
claims or their purported owner might be or might have been
involved in litigation, Gardner made several unsuccessful
attempts to clarify the basis for the Controller’s hold on the
claims. At the end of March 2018, Gardner e-mailed Peccianti
demanding that he immediately identify the problematic
litigation that was delaying the processing of Golden State’s
claims. The Controller did not respond to Gardner’s e-mail. In
August 2018, Golden State filed its complaint against the
Controller to recover its claimed money under the UPL. Based on

                                10
these undisputed facts, the trial court did not err in ruling that
the Controller failed to show a triable issue of material fact as to
its statute of limitations affirmative defense.

      2.    The Controller Demonstrated a Triable Issue of
            Material Fact Concerning Golden State’s Ownership
            of the Claimed Money

      The Controller concedes that the insurance companies and
other entities that delivered the contested money to the
Controller listed Golden State as the owner of that money. 5 It
argues, however, that the trial court erred in failing to find it did
not demonstrate a triable issue of material fact about whether
Golden State had a legal right to that property. We agree.
      There is a triable issue of material fact as to whether
Golden State was formed and operated as part of a criminal
conspiracy to commit insurance fraud. Nelson, who was
designated for some period as Golden State’s sole manager,
pleaded guilty to conspiring to commit insurance fraud in
connection with Golden State’s operation. Nelson testified as
part of her plea that Uwaydah had directed that all patients seen
by a clinic he controlled be prescribed all medications on a list.
She also testified that prescriptions that were returned to Golden
State were relabeled with a different patient name and then an
insurance company would be rebilled for the prescription. And,
she declared that based on her knowledge, Golden State operated

5      We construe this as a concession that Golden State met its
initial burden of demonstrating the elements of its entitlement
under the UPL. Accordingly, we need not decide whether the
court misapplied Evidence Code section 631.

                                 11
under a fraudulent scheme from its founding to her departure
from Uwaydah’s employment in June 2010. Uwaydah, Golden
State’s owner, has been indicted for conspiracy to knowingly
make false or fraudulent claims for payment of health care
benefits concerning Golden State’s operation. Finally, Golden
State filed a certificate of cancellation on October 1, 2010. This
evidence supported an inference that a criminal conspiracy
generated the insurance payments that were the submissions to
the Controller. Specifically, a reasonable fact finder could
conclude that a significant portion of the checks submitted to the
Controller were reimbursements from insurance companies and
other entities for claims filed by Golden State before
October 1, 2010, when it filed its certificate of cancellation. Thus,
there was a question of material fact whether Golden State
owned those check proceeds as “the person who had legal right to
the property before its escheat . . . .” (§ 1540, subd. (d) [it would
have had no legal right to money criminally obtained].)

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                     IV.   DISPOSITION

      The judgment is reversed. The Controller is awarded its
costs on appeal.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                        KIM, J.

I concur:

            MOOR, J.

                              13
Golden State Pharmaceuticals LLC v. Betty T. Yee, as State
Controller
B308625

BAKER, Acting P. J., Concurring

      I similarly conclude reversal is required in this appeal,
albeit by a different analytical route.
      “Equitable tolling is a ‘judicially created, nonstatutory
doctrine’ that ‘ “suspend[s] or extend[s] a statute of limitations as
necessary to ensure fundamental practicality and fairness.” ’
[Citation.] The doctrine applies ‘occasionally and in special
situations’ to ‘soften the harsh impact of technical rules which
might otherwise prevent a good faith litigant from having a day
in court.’ [Citation.] Courts draw authority to toll a filing
deadline from their inherent equitable powers—not from what
the Legislature has declared in any particular statute. [Citation.]
For that reason, we presume that statutory deadlines are subject
to equitable tolling. [Citation.] [¶] But that presumption can be
overcome. Equitable tolling, [our Supreme Court has] . . . also
observed, ‘is not immune’ from the operation of statutes.
[Citation.] A court may conclude that explicit statutory language
or a manifest policy underlying a statute simply cannot be
reconciled with permitting equitable tolling, ‘even in the absence
of an explicit prohibition.’ [Citation.]” 1 (Saint Francis Memorial

1
      Equitable estoppel is not the same as equitable tolling. The
doctrine of equitable estoppel is “‘“founded on concepts of equity

                                 1
Hospital v. State Dept. of Public Health (2020) 9 Cal.5th 710, 719-
720 (Saint Francis).)
       The trial court relied on Golden State Pharmaceuticals
LLC’s (Golden State’s) equitable tolling argument to conclude the
company’s lawsuit need not be dismissed. I believe that was a
mistake because equitable tolling is unavailable in a case like
this.
       Code of Civil Procedure sections 1540 (section 1540) and
1541 (section 1541) establish a procedure for owners of unclaimed
property held by the State to submit a claim for the property’s
return. Critically for our purposes, the statutory scheme is
obviously designed to ensure such claims are resolved promptly.
Specifically, section 1540 requires the Controller to consider a
submitted claim within 180 days of its submission (§ 1540, subd.
(b)) and section 1541 authorizes a claimant to file a civil action if
the Controller does not decide the claim within that 180-day time

and fair dealing. It provides that a person may not deny the
existence of a state of facts if he intentionally led another to
believe a particular circumstance to be true and to rely upon such
belief to his detriment. The elements of the doctrine are that (1)
the party to be estopped must be apprised of the facts; (2) he
must intend that his conduct shall be acted upon, or must so act
that the party asserting the estoppel has a right to believe it was
so intended; (3) the other party must be ignorant of the true state
of facts; and (4) he must rely upon the conduct to his injury.”’
[Citation.]” (Alameda County Deputy Sheriff’s Assn. v. Alameda
County Employees’ Retirement Assn. (2020) 9 Cal.5th 1032, 1072.)
       Plaintiff and respondent Golden State Pharmaceuticals
LLC makes only an equitable tolling argument in this case. So
the question of whether equitable estoppel might apply in
another case with different facts is a question I leave for another
day.

                                 2
frame. Importantly, however, section 1541 requires that any
such civil action must be filed “within 270 days from the filing of
the claim if the Controller fails to make a decision.” (§ 1541.)
      Here, the Controller did not make a decision within 180
days but Golden State failed to bring suit (the statutory
mechanism provided to incentivize prompt claim resolution)
within the statutorily provided 270-day timeframe. That failure
means the lawsuit must be dismissed. In the words of our
Supreme Court in Saint Francis, the policy of ensuring prompt
claim resolution that manifestly underlies sections 1540 and 1541
“simply cannot be reconciled with” the delays tolerated by
equitable tolling. (Saint Francis, supra, 9 Cal.5th at 720; see also
Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 371, 374.)

                       BAKER, Acting P. J.

                                 3