Court Opinion

ID: 9656870
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:05:05.081258+00
Date Added: 2024-06-11T15:09:06.858086
License: Public Domain

Filed 8/23/23 WVJP 2018-3 LP v. SR Capital CA2/3

 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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 opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a).

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                     DIVISION THREE

 WVJP 2018-3 LP,                                                B317658

      Plaintiff and Appellant,                                  Los Angeles County
                                                                Super. Ct. No.
      v.                                                        21STCV06658
 SR CAPITAL LLC et al.,

      Defendants and Respondents.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Michael L. Stern, Judge. Affirmed.
     Aires Law Firm, Timothy Carl Aires for Plaintiff and
Appellant.
     The Wagner Firm, Avi N. Wagner, Charissa Morningstar,
and Jennifer N. Hinds for Defendants and Respondents.
           _______________________________________
                         INTRODUCTION

       Plaintiff and appellant WVJP 2018-3 LP (plaintiff), an
assignee of a judgment against Robert Rechnitz, appeals from a
judgment of dismissal entered after the trial court sustained
without leave to amend the demurrer jointly filed by defendants
and respondents Shlomo Rechnitz1 and SR Capital LLC (SR
Capital) (together, the SR defendants). Plaintiff claimed that
Shlomo, through SR Capital, of which Shlomo is the sole owner
and manager, transferred funds belonging to Robert to a bank
account intended to hold the money beyond the reach of Robert’s
creditors. In its second amended complaint (SAC), plaintiff
asserted a cause of action for conspiracy to hinder, delay, or
defraud creditors. The court sustained the SR defendants’
demurrer on the ground that plaintiff had inadequately pleaded
facts supporting that Robert had any interest in the money
transferred by the SR defendants and denied plaintiff leave to
further amend.
       We affirm.

      FACTUAL AND PROCEDURAL BACKGROUND

     Plaintiff is an assignee of a $787,919.17 judgment against
Robert. Before filing this lawsuit, plaintiff examined Shlomo,
Robert’s nephew, in connection with the action in which the
judgment was entered against Robert. Shlomo also produced
documents in response to a subpoena served on him by plaintiff.

1 Shlomo Rechnitz’s first name is also spelled as Schlomo in the

appellate record. We use Shlomo in this opinion. Because Robert and
Shlomo share a last name, we refer to them by their first names. No
disrespect is intended.

                                   2
       Plaintiff filed its original complaint against the SR
defendants, Marlene Springer Savage, Stanley Treitel, and
Robert in February 2021. The complaint asserted one cause of
action for conspiracy to hinder, delay, and defraud creditors. The
court sustained a demurrer filed by the SR defendants but
granted plaintiff leave to file a first amended complaint, following
plaintiff’s representation that it had obtained “records . . .
pertaining to the [HWP Account], as well as evidence from other
sources” that would permit it to sufficiently allege a claim. In
May 2021, plaintiff filed its first amended complaint. The SR
defendants again demurred, arguing that the first amended
complaint, like the original complaint, failed to allege any
fraudulent transfer by Robert, any injury suffered by plaintiff, or
the elements of a civil conspiracy as to the SR defendants.
Plaintiff again contended that, if the demurrer were sustained,
leave to amend should be granted because it had “obtained
various records . . . pertaining to the [HWP account], as well as
evidence from other sources” and thus “ha[d] access to ample
facts sufficient to allege a common law tort arising out of [a]
scheme to hinder, delay, or defraud creditors.” The court
sustained the demurrer to the first amended complaint but again
granted plaintiff leave to amend.
       In September 2021, plaintiff filed the SAC, the operative
complaint on appeal. The SAC alleges that plaintiff is an assignee
to a judgment creditor and has a claim against Robert, as debtor,
based upon a civil judgment entered in August 2016 and
amended in December 2016 in the Los Angeles Superior Court, in
the sum of $787,919.17, with interest accruing at the rate of
$215.81 per day. Robert is the uncle of Shlomo, who is the only

                                 3
officer, director, member, and manager with any actual or real
authority over SR Capital.
       In September 2016, Treitel and Savage (together, the HWP
defendants) opened a checking account under the fictitious name
Highland Wilshire Properties (the HWP account). The SAC
alleges that, by the express agreement of the defendants, the
purpose of the account was “to hold money in which [Robert] had
an interest beyond the reach of his creditors in order to pay his
personal expenses from time to time at his special instance and
request.” After the HWP account was opened, the HWP
defendants, acting at Robert’s direction, “received money in
which [Robert] had an interest from entities controlled by
[Shlomo], including, without limitation, [SR Capital],” and then
used these funds to pay Robert’s personal expenses. The HWP
account was intended by the defendants to permit Robert “to use
and enjoy money in which he had an interest while at the same
time avoiding execution levy by Plaintiff . . . since the HWP
[a]ccount was not a deposit account standing in the name of
[Robert],” and in fact permitted him to do so.
       The SAC alleges that, between December 2016 and
November 2020, SR Capital transferred over $1.5 million to the
HWP account via 66 transactions in amounts ranging from
$5,000 to $250,000. The day before each of the transfers was
made, Robert and Shlomo “agreed that [SR Capital] would
transfer [the relevant amount] of [Robert’s] money, which [SR
Capital] held for his benefit with the knowledge and consent of its
Manager, [Shlomo], to the HWP Account . . . for the express
purpose of aiding [Robert] in an effort to hinder, delay, or defraud
his creditors.” The SR defendants had notice of the pendency of
the judgment no later than October 22, 2019, by virtue of a Code

                                 4
of Civil Procedure section 708.120 examination order and civil
subpoena duces tecum, but nevertheless continued to participate
in the alleged conspiracy.
        The SAC further alleges that, between January and
November 2020, approximately $166,000 was withdrawn from
the HWP account, via 237 transactions in amounts ranging from
$3.14 to $9,620.75, for Robert’s benefit. Among other things, the
withdrawals went towards medical care, credit card bills, utilities
bills, and insurance payments. Certain withdrawals also went to
individuals, including Savage and others not named in this
action, while others were made in cash.
        The SAC alleges that the money laundering scheme does
not have any indicia of a bona fide loan or series of loans because
there is no promissory note or other instrument evidencing a
promise to repay, no interest has been charged, no fixed schedule
of repayments has been established, no collateral was given, no
repayments have been made, Robert has no reasonable prospect
of repaying any loans, and the parties have not conducted
themselves as if the transactions were loans. It further alleges
that the transactions were not gifts because, at his September 22,
2019, examination, Shlomo acknowledged that they were not
gifts.2

2 The SAC alleges that Shlomo also carries a $240,000 payment made

in December 2019 to the Correction Officers’ Benevolent Association,
Inc. on the books of YTR Capital LLC, an entity he dominates and
controls, “as a loan receivable due and payable by [Robert] even though
any such payment to Correction officers’ Benevolent Association Inc.
provided no reasonably equivalent value to [Robert].” It contends that
this “was more probably than not another money laundering scheme”
designed by Robert and Shlomo to benefit Robert’s son, Jona, in
connection with a criminal restitution order against Jona in the

                                  5
      The SAC does not plead facts explaining how Robert had an
interest in or right to the money held by SR Capital and
subsequently transferred to the HWP account, notwithstanding
that Shlomo was the sole owner and manager of SR Capital.3
      The SAC asserts four causes of action: (1) damages for
conspiracy to hinder, delay, or defraud creditors against all
defendants; (2) “Relief Against Fraudulent Transactions Under
the Uniform Voidable Transactions Act, Civil Code §3439 et seq.”
(UVTA) against all defendants; (3) “Creditor’s Suit in Aid of
Enforcement of Judgment Under Code of Civil Procedure
§708.210 et seq.” against the SR defendants; and (4) “Quia Timet
[Constructive Trust, Equitable Lien, Resulting Trust, Injunction,
Appointment Of Monitor]” against the SR defendants and Robert.
      With respect to the first cause of action for conspiracy to
defraud, plaintiff alleges: “Even assuming, without admission,
that the money transferred through the Money Laundering
Scheme was property of someone other than Defendant Robert
Rechnitz before those transfers were made, once the money
transfers were made, the money became the property exclusively
of Defendant Robert Rechnitz since it was held in the HWP

Southern District of New York. Plaintiff does not appear to allege that
this transaction was part of the conspiracy alleged against the SR
defendants in this action.
3 The original complaint and first amended complaint do not contain

the allegation that the money transferred by SR Capital to the HWP
account was Robert’s. Rather, both complaints alleged that, even if the
money belonged to someone else before it was transferred to the HWP
account, it became Robert’s property after the transfers were made
because it was held in the HWP Account exclusively for his use and
benefit.

                                   6
Account exclusively for his use and benefit.” The SAC further
alleges that, but for the defendants’ actions, “the money in the
HWP Account would have been subject to execution levy using
traditional methods of judgment enforcement.”
       The SR defendants again demurred, arguing that the SAC
did not remedy the failures of the prior complaints with respect
to the first cause of action and that the additional causes of
action impermissibly exceed the scope of the court’s order
granting leave to amend. Plaintiff argued that, if the demurrer
was sustained, it should be given leave to amend the complaint a
third time. However, plaintiff did not identify any new facts that
would permit it to plead any of the causes of action asserted.
       While the demurrer was pending, plaintiff filed a motion
seeking leave to file a third amended complaint. The motion did
not allege any new facts, but included the three causes of action
that had been added to the SAC without prior leave of court and
added a cause of action for “[a]ccounting.” Plaintiff argued that
these causes of action arose out of the same common nucleus of
operative facts pleaded in the SAC and would “address this
Court’s concerns regarding lack of particularity in pleading,
together with additional prayers for relief.”
       Several days later, the court issued its order sustaining the
SR defendants’ demurrer to the SAC. The court found that,
although plaintiff alleged “numerous instances of money going
out of the HWP account, by date, payee (credit card company,
utility company etc.) and amount from January 2020 to
December 2020” and “ ‘an express agreement to use the account
for Robert,’ ” plaintiff did not attach any writing substantiating
any such agreement to the complaint. The court further found
that “there continue to be inadequately pleaded facts how Robert

                                 7
‘had an interest’ in the money that was placed in [the HWP]
account” and that plaintiff continued to fail to properly plead a
cause of action against the SR defendants for conspiracy to
defraud. The court noted that it “had admonished plaintiff not to
amend the Complaint to supplement with additional causes of
action without obtaining leave of court” and that plaintiff had
failed to seek any such leave before adding the other causes of
action. The court dismissed all claims against the SR defendants
with prejudice.
       In the order of dismissal, the court indicated that it was
dismissing the action with prejudice as to “SR Capital LLC, et
al.” but did not indicate that it was dismissing the entire action.
       Plaintiff timely appealed.

                          DISCUSSION

       Plaintiff contends that the court erred in sustaining the
demurrer on several grounds. Plaintiff first argues that the court
incorrectly required that its conspiracy to hinder, delay, or
defraud cause of action be pleaded with particularity, as the
cause of action does not sound in traditional fraud and deceit.
Plaintiff also asserts that the court erred in holding that the
absence of a written agreement evidencing the alleged conspiracy
rendered the SAC insufficient.
       Plaintiff contends that leave to amend should have been
granted and identifies purportedly new facts that it contends
adequately state a claim. Plaintiff further asserts that the
allegations of the SAC and the new facts identified in its briefing
support the theories of liability alleged without leave of court in
the SAC and a civil cause of action under the Racketeer
Influenced and Corrupt Organizations Act (18 U.S.C. § 1961 et
seq.) (RICO).

                                 8
      Finally, plaintiff argues that, even if we otherwise affirm,
we should remand the matter with directions to correct the
judgment of dismissal, which plaintiff contends is unclear as to
which parties were dismissed.
      For the reasons discussed herein, we affirm the court’s
order sustaining the demurrer without leave to amend and
decline to remand the matter with instructions to correct the
judgment.
1.    Standards of Review
       We independently review a trial court’s order sustaining a
demurrer to determine whether the operative complaint alleges
facts sufficient to state a cause of action. (Ivanoff v. Bank of
America, N.A. (2017) 9 Cal.App.5th 719, 725.) We assume the
truth of all properly pled factual allegations and matters that are
judicially noticeable. (Ibid.) “An order sustaining a demurrer
without leave to amend may be affirmed on any ground stated in
the demurrer, even if the trial court did not act on that ground.”
(Association for Los Angeles Deputy Sheriffs v. County of Los
Angeles (2019) 42 Cal.App.5th 918, 934.)
       When a demurrer is sustained without leave to amend, we
decide whether there is a reasonable possibility that the plaintiffs
can amend their complaint to cure the defect. (Blank v. Kirwan
(1985) 39 Cal.3d 311, 318.) If the defect can be cured, “the trial
court has abused its discretion and we reverse; if not, there has
been no abuse of discretion and we affirm.” (Ibid.) “The burden of
proving such reasonable possibility is squarely on the plaintiff.”
(Ibid.)

                                 9
2.    The court properly sustained the demurrer to the SAC.
      2.1.   Plaintiff’s conspiracy to hinder, delay, or defraud
             cause of action sounded in fraud and was
             required to be pleaded with particularity.
       Plaintiff concedes that, “[o]f course, where fraud and deceit
is alleged to be the object of a conspiracy, the claim must be
pleaded with particularity,” but contends that “neither conspiracy
to hinder, delay, or defraud creditors nor the tort of aiding and
abetting a debtor in concealing their assets sound in traditional
fraud and deceit.”4 (Italics added.) We disagree.
       “ ‘[I]n California, fraud must be pled specifically; general
and conclusory allegations do not suffice. [Citations.] “Thus ‘ “the
policy of liberal construction of the pleadings . . . will not
ordinarily be invoked to sustain a pleading defective in any
material respect.” ’ [Citation.] [¶] This particularity requirement
necessitates pleading facts which ‘show how, when, where, to
whom, and by what means the representations were tendered.’ ” ’
[Citation.]” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34
Cal.4th 979, 993.) Similarly, “[c]oncealment is a species of fraud,
and . . . ‘must be pleaded with specificity.’ [Citation.]” (Blickman
Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162
Cal.App.4th 858, 878.)
       “[I]t is well settled that ‘there is no separate tort of civil
conspiracy, and there is no civil action for conspiracy to commit a
recognized tort unless the wrongful act itself is committed and
damage results therefrom.’ [Citations.]” (Kerr v. Rose (1990) 216

4 As the SR defendants note, no cause of action for aiding and abetting

a debtor in concealing assets was pleaded in the SAC.

                                  10
Cal.App.3d 1551, 1564.) In Patrick v. Alacer Corp. (2008) 167
Cal.App.4th 995, 1016, the plaintiff asserted “conspiracy to
defraud” as its first cause of action. The court concluded that the
cause of action was “mislabeled.” (Ibid., fn. 11.) “ ‘Conspiracy is
not a cause of action, but a legal doctrine that imposes liability on
persons who, although not actually committing a tort themselves,
share with the immediate tortfeasors a common plan or design in
its perpetration.’ [Citation.] The cause of action here is for fraud.”
(Ibid.)
       Courts have long held that a conspiracy to defraud must be
pleaded with particularity. (See Ross v. New Amsterdam
Casualty Co. (1922) 56 Cal.App. 254, 258 [demurrer properly
sustained where complaint fell “far short of alleging a conspiracy
to defraud the plaintiff entered into between the defendant[s] . . .
and entirely fails to measure up to that degree of particularity
requisite in actions for damages for fraud and deceit”]; Favila v.
Katten Muchin Rosenman LLP (2010) 188 Cal.App.4th 189, 211
[“because fraud was the object of the conspiracy alleged . . . the
claim must be pleaded with specificity”]; Prakashpalan v.
Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1136
[“Where fraud is alleged to be the object of the conspiracy, the
claim must be pleaded with particularity.”].)
       Neither Aghaian v. Minassian (2020) 59 Cal.App.5th 447
(Aghaian) nor Taylor v. S & M Lamp Co. (1961) 190 Cal.App.2d
700 (Taylor) support plaintiff’s assertion that a cause of action for
conspiracy to hinder, delay, or defraud creditors does not sound
in traditional fraud and deceit and does not need to be pleaded
with particularity.
       In Aghaian, the plaintiffs, beneficiaries of a trust, sued the
defendants, Shahen, Alice and Arthur, in connection with

                                 11
Shahen’s management of the trust properties. (Aghaian, supra,
59 Cal.App.5th at p. 452.) Shahen and Alice had been married for
over 50 years and owned two homes as joint tenants. (Ibid.) The
plaintiffs alleged that Shahen, Alice, and their son, Arthur, who
was also their attorney, “ ‘concocted’ a ‘scheme . . . to hinder,
delay or defraud Shahen’s creditors, particularly [the] [p]laintiffs,
by putting [the couple’s] two houses . . . into Alice’s name only,
and thereby making it more difficult for [the p]laintiffs to levy on
them.’ ” (Ibid.) In furtherance of this scheme, Shahen and Alice
filed a fraudulent petition for marital dissolution even though
they had never separated, and, with Arthur acting as Shahen’s
guardian ad litem, stipulated to a judgment in the dissolution
action under which ownership of the houses was awarded to
Alice, and Shahen was assigned the obligation to pay any
judgment that might thereafter be entered in the plaintiffs’
pending lawsuit. (Id. at pp. 452–453.)
       On appeal, the court concluded that the plaintiffs had
adequately pleaded that “Shahen made the subject transfers with
‘ “an actual intent to hinder, delay or defraud any creditor of the
debtor,” ’ within the meaning of the UVTA, and alleged with
particularity the existence of several badges of fraud: Shahen
made the transfers to an ‘insider[]’ . . . ; he ‘retained control of the
two properties after the transfers’; the plaintiffs had sued Shahen
before he made the transfers; and Shahen ‘did not receive
reasonabl[y] equivalent value . . . for his transfer of the two
properties.’ ” (Aghaian, supra, 59 Cal.App.5th at p. 456, italics
added.) With respect to the cause of action for aiding and abetting
Shahen’s fraudulent transfer asserted against Arthur, the court
noted that the “plaintiffs alleged that Arthur ‘provided
substantial assistance to Shahen and Alice in order to hinder,

                                  12
delay and defraud Shahen’s creditors, including [p]laintiffs,’ ”
including by “ ‘orchestrat[ing] the “divorce strategy” which he
knew was a sham’ ” and “ ‘sign[ing] the quitclaim deeds as
Shahen’s “attorney-in-fact” to transfer title of the [Sherman Oaks
properties] to Alice,’ ” and concluded that these allegations were
“sufficient to state a cause of action for aiding and abetting a
fraudulent transfer.” (Id. at p. 459.)
       The Aghaian court did not expressly state that a cause of
action for aiding and abetting fraud must be pleaded with
particularity. However, as with a conspiracy to defraud, “there
can be no aiding and abetting liability absent the commission of
an underlying tort.” (Nasrawi v. Buck Consultants LLC (2014)
231 Cal.App.4th 328, 343, fn. 7, citing Richard B. LeVine, Inc. v.
Higashi (2005) 131 Cal.App.4th 566, 574.) Since the court had
already concluded that the underlying tort of fraud was pleaded
with particularity, it did not need to restate this requirement
when considering whether the complaint adequately alleged that
Arthur had aided and abetted in that fraud. Thus, Aghaian does
not persuade us that the fraud underlying a cause of action or
conspiracy to defraud need not be pleaded with particularity.
       In Taylor, the question before the court was whether the
complaint, filed in propria persona, stated a cause of action.
(Taylor, supra, 190 Cal.App.2d at p. 703.) The complaint sought
damages for conversion of personal property belonging to plaintiff
and alleged that the defendant removed the locks from the
plaintiff’s business, “caused the equipment, supplies, books and
records of [plaintiff’s business] to be removed from the premises,
and has refused to account to plaintiff for same.” (Id. at p. 704.)
The court observed that “ ‘no particular form of words is essential
in averring a conversion, provided the fact of the conversion is

                                13
sufficiently stated.’ . . . [Citation.]” (Ibid.) “The failure of the
complaint to use such terms as ‘fraud,’ ‘to defraud creditors,’
‘unlawfully,’ or ‘wrongfully’ does not render the pleading defective
where, as here, such conduct and intent is implied from the
ultimate facts alleged,” including that “the removal of the
plaintiff’s property was carried out ‘surreptitiously.’ ” (Id. at
p. 705.) The court concluded that the plaintiff had adequately
alleged a cause of action for conversion. (Ibid.) The court also
concluded that the complaint stated a cause of action based on
allegations that the defendant had assisted individuals against
whom the plaintiff had a judgment in concealing their assets and
thus in preventing plaintiff from collecting the judgment. (Ibid.)
“[A] debtor and those who conspire with him to conceal his assets
for the purpose of defrauding creditors are guilty of committing a
tort and each is liable in damages.” (Id. at p. 706.) The Taylor
court did not discuss the pleading standard for this second cause
of action.
       Plaintiff relies on the Taylor court’s discussion of the
pleading standard for conversion in arguing that particularity is
not required, but does not argue that the SAC asserts a
conversion cause of action under a mistaken label. “Conversion is
a species of strict liability in which questions of good faith, lack of
knowledge and motive are ordinarily immaterial.” (City of Los
Angeles v. Superior Court (1978) 85 Cal.App.3d 143, 149.) “[I]f
plaintiff’s ownership of the property is properly alleged and there
is an averment that the defendant converted the same, a cause of
action [for conversion] is sufficiently stated [citation].” “[N]o
particular form of words is essential in averring a conversion,
provided the fact of the conversion is sufficiently stated . . . .”
(Baird v. Olsheski (1929) 102 Cal.App. 452, 454.) In contrast,

                                  14
“ ‘[f]raud is an intentional tort’ ” requiring a knowledge of falsity
and intent to defraud. (Intrieri v. Superior Court (2004) 117
Cal.App.4th 72, 85.) Further, in the absence of any express
statement by the Taylor court that the relaxed pleading standard
for conversion also applied to the conspiracy to defraud cause of
action, and in light of the many cases holding that a conspiracy to
defraud must be pleaded with particularity, we reject plaintiff’s
contention that Taylor supports that it was only required to plead
ultimate conclusions in order to state a cause of action for
conspiracy to defraud.
        In sum, the gravamen of the SAC is that the SR defendants
conspired to defraud plaintiff by concealing assets belonging to
Robert. The court correctly concluded that plaintiff’s cause of
action for conspiracy to hinder, delay, or defraud must be pleaded
with particularity.
      2.2.   The SAC failed to plead any underlying act of
             fraud with particularity.
       We next consider whether the SAC stated a cause of action
for conspiracy to hinder, delay, or defraud with particularity. To
adequately plead a claim for civil conspiracy, plaintiffs must
plead facts to support three elements: “(1) the formation and
operation of the conspiracy, (2) wrongful conduct in furtherance
of the conspiracy, and (3) damages arising from the wrongful
conduct.” (Kidron v. Movie Acquisition Corp. (1995) 40
Cal.App.4th 1571, 1581.) Here, as discussed, the wrongful act
alleged was fraud. “ ‘The elements of fraud . . . are (a)
misrepresentation (false representation, concealment, or
nondisclosure); (b) knowledge of falsity (or “scienter”); (c) intent
to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e)

                                  15
resulting damage.’ ” (Lazar v. Superior Court (1996) 12 Cal.4th
631, 638.)
       The SAC alleges that the money that was transferred from
SR Capital to the HWP account, which the HWP defendants used
to pay for Robert’s personal expenses, was Robert’s money before
any transfer took place, and that the defendants thus conspired
to keep money that should have been used to satisfy the
judgment out of plaintiff’s reach. Alternatively, the SAC alleges
that, even if the money was not Robert’s before SR Capital
transferred it to the HWP account, it belonged to Robert once in
that account because the HWP defendants agreed to use it for his
sole benefit. We consider whether the SAC adequately alleges
fraud under both theories in turn.
      2.2.1. The SAC fails to plead with particularity that
             the money transferred from SR Capital to the
             HWP account belonged to Robert.
       As a preliminary matter, the SR defendants contend that
the allegation that money transferred from SR Capital to the
HWP account was Robert’s should be disregarded as a sham
pleading. “Under the sham pleading doctrine, plaintiffs are
precluded from amending complaints to omit harmful allegations,
without explanation, from previous complaints to avoid attacks
raised in demurrers or motions for summary judgment.
[Citations.] . . . ‘Allegations in the original pleading that rendered
it vulnerable to demurrer or other attack cannot simply be
omitted without explanation in the amended pleading. The policy
against sham pleadings requires the pleader to explain
satisfactorily any such omission.’ [Citation.]” (Deveny v. Entropin,
Inc. (2006) 139 Cal.App.4th 408, 425–426, fn. omitted.) The
doctrine is not intended to prevent honest complainants from

                                 16
correcting erroneous allegations or to prevent the correction of
ambiguous facts, but to enable courts to prevent an abuse of
process. (Id. at p. 426.)
       In the original complaint, plaintiff alleged that, regardless
of “the nature of the money transfers . . . before those transfers
were made . . . once the money transfers were made the money
became the property exclusively of [Robert].” In the operative
complaint, plaintiff instead alleges that the transfers from SR
Capital consisted “of Defendant Robert Rechnitz’s money.”
       We disagree with the SR defendants’ contention that these
two allegations are necessarily inconsistent. The original
complaint did not appear to affirmatively allege that the funds
belonged to someone other than Robert, but that it did not matter
what the source of the funds was because they were eventually
used for Robert’s benefit. Indeed, plaintiff continued to allege in
the SAC that, even if the money was not Robert’s to begin with, it
became his property once it was held in the HWP account for his
benefit. Thus, the SAC did not simply remove an unhelpful
allegation. The further allegation that the funds transferred to
the HWP account belonged to Robert could be characterized as
correcting a fact initially left ambiguous.
       Nevertheless, we conclude that plaintiff failed to plead any
specific facts supporting that the money transferred by SR
Capital to the HWP account was Robert’s. There are dozens of
allegations concerning the circumstances surrounding the
transfers from SR Capital to the HWP account, and hundreds
concerning how funds in the HWP account were used for Robert’s
benefit, but there are none addressing whether, when, and how
Robert transferred funds to SR Capital, the amount of any such
transfers, or whether any consideration received by Robert for

                                17
such transfers was reasonably equivalent to the value of any
asset transferred or the amount of the obligation incurred. The
allegation that the SR defendants’ transfers “greatly reduced” the
apparent value of Robert’s estate is unsupported by any specific
allegations.
       Plaintiff argues that it need not allege any fraudulent
transfer of Robert’s assets to plead a conspiracy to defraud, citing
Taylor, supra, 190 Cal.App.2d at page 705. The Taylor court held
that a conspiracy to defraud had been adequately alleged where
the plaintiff pleaded “a concealment of [the judgment debtors’]
assets for the purpose of defrauding their principal creditor.”
(Ibid.) It is possible that plaintiff could allege a conspiracy to
defraud by pleading the existence of an agreement to conceal the
debtor’s assets, or to assist the debtor in concealing them.
However, plaintiff has pleaded no specific facts supporting that
the SR defendants assisted Robert in concealing assets that
belonged to him to keep them beyond the reach of his creditors.
The term “conceal” does not appear anywhere in the SAC.
Further, if the money SR Capital transferred to the HWP account
was Robert’s, as the SAC repeatedly alleges, the implication is
that Robert transferred that money to SR Capital or Shlomo at
some earlier point in time. Taylor does not relieve plaintiff of the
obligation to plead the circumstances of any such transfer.
       Plaintiff further alleges and contends that this is a
standard “piggy bank” case but fails to address the fundamental
differences between the cases on which it relies and the
circumstances alleged in the SAC.
       In Curci Investments, LLC v. Baldwin (2017) 14
Cal.App.5th 214, 217 (Curci), the creditor sought to add a limited
liability company (LLC) created by the debtor, a real estate

                                18
developer, as a judgment debtor. The LLC in question was
formed for the sole purpose of holding the debtor’s and his wife’s
cash balances. (Id. at p. 218.) The LLC had two members: the
debtor, who had a 99 percent member interest, and his wife, who
had a 1 percent member interest. (Ibid.) Thus, the debtor
determined when, if at all, the LLC would make monetary
distributions to its members. (Ibid.) Two years after forming the
LLC, the debtor, in an individual capacity, borrowed $5.5 million
from the creditor, to be repaid in full by January 2009. (Ibid.)
Shortly thereafter, the debtor, through the LLC, settled eight
family trusts and loaned a total of approximately $42.6 million to
three general partnerships formed for estate planning purposes.
(Ibid.) When the debtor did not repay the $5.5 million loan, the
creditor filed an action and sought judgment, which was entered
in the creditor’s favor. (Id. at p. 219.) Despite having made no
payments on the judgment, in 2014, the debtor, as manager of
the LLC, chose to execute amendments to the $42.6 million loan
to extend the terms by five years without requiring any
consideration for the extension. (Ibid.) The creditor sought a
charging order against the LLC and other business entities in
which the debtor had an interest, which was granted in 2014.
(Ibid.) The creditor received no money as a result of the charging
order. (Ibid.) Although the LLC had distributed $176 million to
the debtor and his wife from 2006 to 2012, no distributions were
made since the entry of judgment against the debtor. (Ibid.) The
creditor therefore sought to make the LLC a judgment debtor
under the outside reverse veil piercing doctrine. (Ibid.) The Curci
court concluded that the doctrine was available in the case and
remanded to allow the trial court to engage in the required fact-
driven analysis in the first instance. (Id. at p. 224.)

                                19
       In In re Hamm (Bankr. S.D.Fla. 2006) 356 B.R. 263, 267
(Hamm), the debtors, a husband and wife, brought an adversary
proceeding seeking a determination that their federal income tax
liabilities were discharged in their underlying chapter 7 case. The
court concluded that the debtors’ tax liabilities survived their
bankruptcy and could be enforced by the government. (Ibid.) As is
relevant here, the husband, who was a plastic surgeon, operated
his practice as a corporation and later as an LLC, with separate
accounts from the debtors’ personal accounts. (Id. at pp. 273–
274.) However, he withdrew an average of $80 per day from his
practice’s account for personal expenses, such as handymen,
parking valets, and cash wires for the debtors’ children. (Id. at
p. 274.) The court “conclude[d] that the [d]ebtors used the
business account to the extent of their personal-use withdrawals
as a kind of personal piggy bank upon which the Internal
Revenue Service could not easily levy.” (Id. at p. 281.)
       Thus, in both Curci and Hamm (neither of which was
decided on a demurrer to a claim of fraud or conspiracy to
defraud), the debtors controlled the LLCs they used as piggy
banks for personal expenses. Here, the SAC alleges that money
held by SR Capital was Robert’s money but does not explain how
Robert had any interest in or right to funds that were held by a
company controlled completely by Shlomo.
       Plaintiff also relies heavily on Nagel v. Westen (2021) 59
Cal.App.5th 740 (Nagel), both for the proposition that the law
will not be interpreted in a way that frees up debtors to devise
new and more creative ways to circumvent valid obligations and
in support of its claim that the court placed too high a pleading
burden on plaintiff. Nagel concerned a claim brought under the
UVTA. (Id. at p. 744.) In Nagel, the plaintiff purchased a house

                                20
from defendants that turned out to have extensive, undisclosed
water damage. (Ibid.) When it had become apparent that the
arbitrator would rule in plaintiff’s favor, the defendants designed
and implemented an asset protection plan, which included the
purchase of a house in Texas, which they improved with the
balance of their sale proceeds. (Id. at p. 745.) Defendants
promptly moved to Texas upon receiving the arbitrator’s
preliminary award so they could invoke the state’s unlimited
homestead exemption to shield the new house from creditors.
(Ibid.) The defendants argued that the plaintiff could not
maintain a cause of action for fraudulent transfer without
identifying a third party transferee who received their assets and
the trial court agreed. (Id. at p. 746.)
       On appeal, the court concluded that the plaintiff had
adequately alleged a transfer under the UVTA where she alleged
that defendants “moved their personal belongings and financial
assets, including a portion of the . . . sale proceeds, to a foreign
jurisdiction” and that “they used the . . . sale proceeds to buy and
improve foreign real estate for the purpose of shrinking the
corpus of assets available for collection.” (Nagel, supra, 59
Cal.App.5th at p. 749.) It held that “physically relocating
personal property and transmitting or transporting sale proceeds
out of state, then transmuting them into a different legal form,
may constitute a direct or indirect mode of parting with assets or
one’s interest in those assets” and that “the UVTA does not limit
its enforcement measures to third parties.” (Id. at pp. 749–750.)
       Nagel does not assist plaintiff any more than Curci or
Hamm. The issue in Nagel was whether transmuting property
without transferring it to a third party could support a claim
under the UVTA. The plaintiff in Nagel alleged that the

                                 21
defendants, upon realizing that the outcome of the arbitration
would not be favorable, used the proceeds from the fraudulent
sale of their home to the plaintiff and purchased and improved a
house in Texas for the express purpose of shielding that money
from collection. Here, there are no specific allegations supporting
that Robert transferred or transmuted any property in order to
shield it from his creditors; there is only the conclusory allegation
that money held by SR Capital and later transferred to the HWP
account belonged to Robert.
       Plaintiff contends that its allegations that the transfers
made by SR Capital were neither gifts nor bona fide loans was
sufficient to plead that the money transferred belonged to Robert.
We disagree. As noted, to adequately plead fraud, a plaintiff must
allege facts showing “ ‘ “ ‘how, when, where, to whom, and by
what means’ ” ’ ” the fraud was committed. (Robinson Helicopter
Co., Inc. v. Dana Corp., supra, 34 Cal.4th at p. 993.) Allegations
that the transfers from SR Capital were not gifts or bona fide
loans to Robert are not an adequate substitute for pleading with
specificity that assets moved from SR Capital to the HWP
account were Robert’s and thus would have been available to
satisfy the judgment if not for the defendants’ actions in
concealing them.
       Chen v. Berenjian (2019) 33 Cal.App.5th 811, on which
plaintiff relies, is of little assistance to plaintiff. In Chen, the
plaintiff obtained two judgments against the debtor, Shazad, who
entered into an agreement with his brother, Sharmad, that
Sharmad would file a lawsuit against Shazad, Shazad would
allow a default judgment to be taken against him, and Sharmad
would obtain title to or a lien against all of Shazad’s assets in
order to create a shield against the plaintiff and other creditors.

                                 22
(Id. at p. 815.) The plaintiff alleged that Sharmad made no
genuine effort to enforce the judgment or obtain assets from
Shazad in satisfaction of the judgment. (Id. at p. 816.) However,
when plaintiff attempted to enforce the judgment against
Shazad, Sharmad would levy on the property to defeat plaintiff’s
efforts. (Ibid.) For example, Sharmad levied on stereo speakers
that Shazad had sold to the plaintiff and which were the basis of
plaintiff’s lawsuit against Shazad to defeat plaintiff’s claim.
(Ibid.) Shazad also transferred other assets to Sharmad without
reasonable consideration to conceal them from the plaintiff.
(Ibid.) The primary issue in Chen was whether the litigation
privilege barred the plaintiff’s claim under the UVTA (id. at
pp. 817–822), which has no bearing here. The court also held that
the trial court had erred in sustaining the demurrer on grounds
of uncertainty because plaintiff alleged that the speakers
belonged to the business owned by Shazad, which was not a
named defendant. (Id. at p. 822.) The Court of Appeal concluded
that the complaint had adequately alleged that the speakers were
owned by Shazad. (Ibid.)
       Thus, the sole uncertainty identified by the trial court in
Chen was not whether a fraudulent transfer by the debtor had
been alleged, but whether the speakers belonged to Shazad or his
business. Unlike here, the complaint in Chen alleged multiple
transfers from Shazad to his brother that were intended to
frustrate the plaintiff’s attempts to enforce his judgment against
Shazad and identified specific assets involved in those transfers.
Nothing in the opinion indicates that, where a transfer from an
individual to a debtor is alleged to be neither a gift nor a bona
fide loan, the plaintiff has adequately alleged an earlier
fraudulent transfer from the debtor to that individual.

                               23
      Plaintiff contends that it may be relieved of the obligation
to plead fraud with particularity if facts supporting the claim lie
more within the defendant’s knowledge than plaintiff’s. However,
as the SR defendants point out, plaintiff did not argue that this
exception applied below and has therefore waived this argument.
(See Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th
1480, 1488, fn. 3 [“It is axiomatic that arguments not asserted
below are waived and will not be considered for the first time on
appeal”].) Even if plaintiff had not forfeited this contention, the
cases plaintiff relies on recognize that “ ‘[l]ess specificity is
required when “it appears from the nature of the allegations that
the defendant must necessarily possess full information
concerning the facts of the controversy,” ’ ” which, for example,
can relieve the plaintiff of pleading the names of employees who
made misrepresentations. (Miles v. Deutsche Bank National
Trust Co. (2015) 236 Cal.App.4th 394, 403.) Plaintiff does not cite
any cases supporting that it may carry its burden of pleading a
cause of action sounding in fraud without alleging any facts
supporting that fraud took place and merely alleging the result of
the purported fraud—i.e., that the funds transferred by SR
Capital to the HWP account consisted of Robert’s money.
      2.2.2. The SAC fails to allege that there was any
             underlying fraud if the money was not Robert’s
             prior to the defendants’ acts.
      The SAC alleges that, even if the money transferred by SR
Capital to the HWP account was not initially Robert’s, it became
his because it was held exclusively in the account for his use and
benefit. However, even if that is the case, it is unclear how the
transfer of the funds from SR Capital to the HWP account
delayed, hindered, or defrauded creditors.

                                24
       Although we “treat[] the demurrer as admitting all
material facts properly pleaded,” we do not “assume the truth of
contentions, deductions or conclusions of law.” (Aubry v. Tri-City
Hospital Dist. (1992) 2 Cal.4th 962, 967.) Thus, we are not
required to accept the conclusion that, even if Robert had no right
to this money beforehand, “[b]ut for the Money Laundering
Scheme, the money in the HWP account would have been subject
to execution levy using traditional methods of judgment
enforcement.” Rather, taking the facts alleged as true, plaintiff
could not levy on funds held by the SR defendants. If the HWP
defendants used the funds transferred to that account for
purposes other than paying for Robert’s expenses, plaintiff could
not claim that those funds belonged to Robert, since the SAC
alleges that the account was controlled by the HWP defendants.
In other words, if the money was not Robert’s before the
defendants’ actions, the only way money deposited in the HWP
account could arguably be available to satisfy the judgment
against him is because the SR defendants made the transfers and
the HWP defendants agreed to use the account to cover Robert’s
personal expenses.
       The SAC does not explain how the SR defendants’ acts,
which created a new source of funds allegedly belonging to
Robert, rather than concealing funds already belonging to him,
hindered, delayed, or defrauded plaintiff. Plaintiff does not
identify a single case where a transfer made to a judgment debtor
or funding an account to cover the debtor’s personal expenses was
held to be sufficient to plead fraud or a conspiracy to defraud
against the transferor.
       Assuming for the sake of argument that the SR defendants
acted with fraudulent intent, the SAC fails to allege how

                                25
defendants’ actions injured plaintiff if the money was not Robert’s
before it was transferred to the HWP account. If the alleged
damages would have resulted even in the absence of the fraud,
“ ‘causation cannot be alleged and a fraud cause of action cannot
be sustained.’ [Citation.]” (Rossberg v. Bank of America, N.A.
(2013) 219 Cal.App.4th 1481, 1499; see also Berger v. Varum
(2019) 35 Cal.App.5th 1013, 1020 [to plead common law
fraudulent transfer, “ ‘ “[m]ere intent to delay or defraud is not
sufficient; injury to the creditor must be shown affirmatively . . .
[and] prejudice to the plaintiff is essential” ’ ”].) The SAC alleges
that “[p]laintiff has been damaged by . . . not being able to apply
the money placed in the HWP account from time to time in
satisfaction of the judgment.” However, this theory of damages
presumes that the money was Robert’s, and thus available to
satisfy the judgment before it was moved to the HWP account.
Plaintiff was also required to allege how the defendants’ acts
resulted in harm to plaintiff that it would not have otherwise
suffered even if the money was not Robert’s in the first place.
       Plaintiff has failed to do so. “A well-established principle of
the law of fraudulent transfers is . . . [that] ‘[i]t cannot be said
that a creditor has been injured unless the transfer puts beyond
[its] reach property [it] otherwise would be able to subject to the
payment of [the] debt.’ [Citations.]” (Mehrtash v. Mehrtash (2001)
93 Cal.App.4th 75, 80.)5 Plaintiff does not allege any facts
supporting that the money SR Capital transferred to the HWP

5 Although Mehrtash v. Mehrtash, supra, 93 Cal.App.4th 75 was an

action brought under the UVTA, the principles set forth in such cases
are instructive when considering a common law claim premised on a
fraudulent transfer. (See Berger v. Varum, supra, 35 Cal.App.5th at
p. 1020.)

                                  26
account would otherwise have been available to satisfy the
judgment. Shlomo is not the judgment debtor, and the SAC does
not allege that Robert has any ownership or member interest in
SR Capital. Thus, plaintiff would not be in any better position to
obtain satisfaction of the judgment if the alleged bad acts had not
taken place.
       Rice v. Downs (2021) 73 Cal.App.5th 213 (Rice) does not
assist plaintiff. In that case, the debtor, Rice, was the founder
and sole managing member of Triton Community Development
LLC (Triton). (Id. at p. 219.) Downs was Rice’s attorney and, after
their relationship deteriorated, Downs obtained an arbitration
award against Rice for hundreds of thousands of dollars in
attorney fees and costs. (Id. at pp. 218–219.) Judgment was
entered and the court granted Downs’s motion for a charging
order directing various limited liability companies of which Rice
was a member, including Triton, to pay any distributions to
which Rice was entitled directly to Downs until the judgment was
satisfied. (Id. at p. 220.)
       Rice filed for Chapter 11 bankruptcy and disclosed that,
after the charging order was entered, Triton had paid Glaser
Weil Fink Howard Avchen & Shapiro, LLC (Glaser Weil), the
firm that represented him in his action against Downs, $450,000.
(Rice, supra, 73 Cal.App.5th at p. 220.) Downs argued that this
transfer violated the charging order and argued that the trial
court should order this payment disgorged from Glaser Weil.
(Ibid.) Rice contended that months before Downs moved for the
charging order, Triton had entered into an agreement with
Glaser Weil under which Triton became a co-obligor on Rice’s
debt to the law firm and that the payment to Glaser Weil was not
a distribution to Rice subject to the charging order, but rather “a

                                27
payment made by Triton to satisfy its own debt” as co-obligor on
Rice’s debt. (Id. at pp. 220–221.) Rice also argued that “Glaser
Weil had a ‘perfected security interest in those funds which was
senior to Downs’[s] lien arising from the charging order’ ” because
he had granted Glaser Weil a security interest in his membership
in Triton, which Glaser Weil had perfected. (Id. at p. 221.) The
trial court granted the enforcement motion and, when Rice stated
he could not pay, agreed with Downs’s suggestion that it should
be disgorged from Glaser Weil. (Id. at p. 223.) The court later
issued its written order, in which it concluded that Triton was an
alter ego of Rice and amended the charging order to make Triton
equally liable jointly and severally liable for the sums owed to
Downs. (Id. at p. 224.) It further held that the payment to Glaser
Weil was improper and “ ‘a windfall in light of a valid order from
this Court that the monies should have been used to satisfy that
charging order[,]’ ” and ordered Glaser Weil to pay Downs
$450,000. (Id. at p. 225.) Glaser Weil appealed. (Ibid.)
       On appeal, the court rejected the argument that the
$450,000 payment was not a distribution subject to the charging
order. (Rice, supra, 73 Cal.App.5th at p. 225.) The court
concluded that “it is clear that had Rice disbursed the $450,000 to
himself to pay his legal bills, that disbursement would constitute
a distribution;” that “Rice acknowledged in his declaration that
he was ‘the founder and sole Managing Member’ of Triton”; and
that “[t]his evidence supports the trial court’s finding that . . .
Rice had full control over Triton’s distributions.” (Id. at p. 227.)
Further, “[e]ven if Triton made the payment pursuant to its own
contractual obligation to Glaser Weil . . . the payment was
‘pursuant to the obligation [Triton] had undertaken to Glaser
Weil,’ referring to the agreement ‘under which Triton became a

                                28
co-obligor with [Rice] for past and future fees charged by the
firm[,]’ ” which “establishe[d] that Triton paid not because Glaser
Weil provided services to Triton, but because Triton had agreed
to become ‘co-obligor’ on Rice’s obligation.” (Ibid.) “Thus, although
Triton may have been paying for the obligation it had assumed,
the result was that Rice personally was relieved of a portion of
his debt.” (Id. at pp. 227–228.) Further, Glaser Weil failed to
challenge the trial court’s conclusion that Triton was Rice’s alter
ego. “The fact that as a technical matter it was Triton that made
the payment pursuant to its own purported obligations was
immaterial because Triton and Rice were effectively one and the
same.” (Id. at p. 228.) The court nevertheless concluded that
Glaser Weil’s perfected security interest had priority over the
charging order. (Id. at p. 229.)
       Rice did not address whether Rice or Triton were liable for
a fraudulent transfer. Whether a payment made by a company
totally owned and controlled by a judgment debtor was a
distribution subject to a charging order has little relevance here,
where the SAC alleges that the SR defendants used money
within their control to fund an account to pay the debtor’s
personal expenses. Nor are we concerned with whether the HWP
account can be reached by Robert’s creditors because the
payments made by the HWP defendants on Robert’s behalf
“effectively [were] money in [Robert’s] pocket.” (Rice, supra, 73
Cal.App.5th at p. 228.)6 The sole issue before us is whether the

6 It appears from the record that a court has already held that the

HWP account “constitutes property in which [Robert] has an interest
and shall be applied in satisfaction of the Judgment” against him.

                                  29
allegations, if accepted as true, support that the SR defendants
conspired to defraud plaintiff.
      We hold that plaintiff has failed to meet its burden of
pleading fraud, and thus has necessarily failed to allege a
conspiracy to commit fraud against the SR defendants. Thus, the
demurrer was properly sustained.
3.    The court did not abuse its discretion in denying
      plaintiff leave to amend its complaint a third time.
       Having concluded that the trial court did not err in
sustaining the demurrer, we consider whether the plaintiff has
demonstrated that the defects in the SAC may be cured by
amendment, such that the denial of leave to amend was an abuse
of discretion.
       Plaintiff identifies both new facts and new causes of action
that it contends satisfy its burden of demonstrating that
amendment would not be futile. “Contrary to long-standing rules
generally precluding a party from changing the theory of the case
on appeal [citations], a plaintiff may propose new facts or
theories to show the complaint can be amended to state a cause of
action, thereby showing the trial court ‘abused its discretion’
[citation] in not granting leave to amend.” (Connerly v. State of
California (2014) 229 Cal.App.4th 457, 460.) “The plaintiff ‘must
show in what manner he can amend his complaint and how that
amendment will change the legal effect of his pleading.’
[Citations.]” (Ibid.)
       We conclude that the new legal theories and facts on which
plaintiff relies do not remedy the defects of the SAC.

                                30
      3.1.   Plaintiff fails to identify any new facts
             supporting that it could adequately plead a cause
             of action against defendants.
       In arguing that it can allege facts supporting a cause of
action against the SR defendants, plaintiff relies on documents
attached to its motion to file a third amended complaint, which it
concedes was mooted by its appeal. Nevertheless, we may
consider these facts in determining whether plaintiff could cure
the defects in the SAC.
       Plaintiff identifies 10 checks drawn from the HWP account,
which indicate on their face that they were for Robert’s benefit.
However, as the SR defendants point out, the amounts, dates,
and recipients of these checks were all alleged in the SAC.7 These
facts are not new, nor do they assist plaintiff in pleading that the
money in the HWP account belonged to Robert before it was
deposited there, or that plaintiff was injured by the SR
defendants’ act of transferring money to the HWP account for
Robert’s benefit.
       Plaintiff further claims that sworn testimony Shlomo gave
in 2019 supports the alleged money laundering scheme. The
testimony indicates that Shlomo paid bills on Robert’s behalf and
paid money to the HWP account, facts already alleged in the
SAC. The testimony does not support that Shlomo assisted in a
scheme to keep money that belonged to Robert out of the reach of

7 The SAC alleges that a check in the amount of $700 was signed by

Marlene Savage and tendered to Facey Medical Foundation for
Robert’s benefit on May 4, 2020. Plaintiff’s opening brief includes a
check image to the same recipient on the same date indicating that the
amount paid was $57.90.

                                 31
Robert’s creditors. Similarly, plaintiff cites testimony given by
Robert at a postjudgment examination which establishes that:
Savage worked for Robert, handling “paperwork, technical
matters, things like that”; Robert did not believe that Savage
paid his mortgage; and Robert did not know whether his
mortgage was paid in December 2019 or January 2020. Plaintiff
fails to explain how this testimony assists it in pleading a
conspiracy to defraud or any other cause of action against the SR
defendants.
       Plaintiff also relies on a document showing that the HWP
account was not in Robert’s name, but in Treitel’s. However, the
SAC already alleges that the HWP account was opened by Treitel
and Savage, not by Robert. This fact is neither new nor of
assistance in remedying the deficiencies in the SAC.
       Finally, plaintiff cites a judgment entered in an action
brought against Banner Bank, Robert, and various LLCs, in
which the court held that “[t]he express purpose of Defendant
Banner Bank Account Nos. 58406003828 [the HWP account] and
58406006076 was to hold money in which Defendant Robert
Rechnitz had an interest beyond the reach of his creditors.” As to
all defendants but Banner Bank, the judgment was by default.
The action in question did not name the SR defendants as parties
and the mere fact that judgment was entered does not establish
that plaintiff has or could adequately allege that the SR
defendants engaged in a conspiracy to defraud plaintiff.8

8 Plaintiff suggests that the judgment has collateral estoppel effect as

to the SR defendants. The SR defendants correctly contend that the
doctrine of collateral estoppel only applies if “the party against whom
the plea is asserted was a party, or in privity with a party, to the
previous suit.” (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986)

                                   32
      In sum, none of the facts identified indicate that plaintiff
could cure the deficiencies of the SAC with respect to the SR
defendants.
      3.2.   Plaintiff fails to demonstrate the possible
             viability of any new causes of action.
       Plaintiff contends that the second through fourth causes of
action advanced in the SAC were not new causes of action but
“new theories of liability based on the same common nucleus of
facts,” and that the court should therefore have granted plaintiff
leave to amend the complaint to plead them. To satisfy its burden
of proving there is a reasonable possibility of amendment,
plaintiff was required to “clearly and specifically set forth the
‘applicable substantive law’ [citation] and the legal basis for
amendment, i.e., the elements of the cause of action and
authority for it. Further, plaintiff must set forth factual
allegations that sufficiently state all required elements of that
cause of action.” (Rakestraw v. California Physicians’ Service
(2000) 81 Cal.App.4th 39, 43.) “Where the appellant offers no
allegations to support the possibility of amendment and no legal
authority showing the viability of new causes of action, there is
no basis for finding the trial court abused its discretion when it
sustained the demurrer without leave to amend.” (Id. at p. 44.)
       Plaintiff fails to explain the requirements for pleading the
additional causes of action (or theories of liability) identified in
the SAC, nor does it identify “ ‘specific facts showing the
complaint can be amended to state’ ” them. (Roe v. Hesperia

41 Cal.3d 903, 910.) Plaintiff advances no facts or arguments
supporting that the SR defendants were in privity with any party to
the action in which the judgment was entered.

                                 33
Unified School District (2022) 85 Cal.App.5th 13, 24.) Plaintiff
merely asserts that a reasonable trier of fact could find
defendants liable for damages and that plaintiff therefore “has
available theories of liability” under the UVTA, a creditor’s suit
in aid of enforcement of judgment, quia timet, and accounting.
This was not sufficient to carry plaintiff’s burden.
        Although Plaintiff makes a more robust attempt at arguing
that it could maintain a RICO cause of action against the SR
defendants, it nevertheless fails to establish a reasonable
possibility that this cause of action remedies the defects in the
SAC.
        The elements of a civil RICO claim are: “ ‘(1) conduct (2) of
an enterprise (3) through a pattern (4) of racketeering activity
(known as “predicate acts”) (5) causing injury to the plaintiff’s
“business or property.” ’ [Citation.]” (Living Designs, Inc. v. E.I.
Dupont de Nemours and Co. (9th Cir. 2005) 431 F.3d 353, 361.)
“ ‘ “[R]acketeering activity” is any act indictable under several
provisions of Title 18 of the United States Code, and includes the
predicate acts of mail fraud, wire fraud and obstruction of
justice.’ [Citation.]” (Sanford v. MemberWorks, Inc. (9th Cir.
2010) 625 F.3d 550, 557.) “A fraud claim under both federal and
state law requires (1) a representation or failure to disclose a
material fact, (2) falsity, (3) knowledge of falsity, (4) intent to
deceive, (5) reliance, and (6) damage arising from the reliance.
[Citations.] Mail and wire fraud requires an additional element—
‘the existence of a scheme which was reasonably calculated to
deceive persons of ordinary prudence and comprehension.’
[Citation.]” (Globe Internat., Inc. v. Superior Court (1992) 9
Cal.App.4th 393, 399.) Like common law fraud under California
law, mail and wire fraud under RICO must be pleaded with

                                 34
particularity, including “the time, place, and specific content of
the false representations as well as the identities of the parties to
the misrepresentation.” (Moore v. Kayport Package Exp., Inc. (9th
Cir. 1989) 885 F.2d 531, 541.)
       Plaintiff contends that the SR defendants have engaged in
wire fraud, relying on the same allegations we have held fail to
allege fraud with specificity in arguing that it states a cause of
action for RICO. Presenting the same allegations under a new
title does not remedy the fundamental deficiencies previously
identified.
       Plaintiff quotes Smagin v. Yegiazaryan (9th Cir. 2022) 37
F.4th 562 (Smagin) at great length and asserts that the conduct
alleged with respect to the defendants is comparable to the acts of
the defendants in that case. Plaintiff’s reliance is misplaced. In
Smagin, the defendant and others used a series of fraudulent
transactions to steal the plaintiff’s shares in a joint real estate
investment in Russia, and the defendant was indicted by Russian
authorities but fled to California. (Id. at pp. 564–565.) The
plaintiff obtained an arbitration award in London and a
California district court judge confirmed the award, entered
judgment against the defendant and entered a temporary
protective order freezing the defendant’s assets. (Id. at p. 565.)
The protective order specifically referenced assets that the
defendant might receive in a pending arbitration proceeding.
(Ibid.) The defendant ultimately settled the arbitration for $168
million and the plaintiff alleged that, in order to avoid paying the
judgment, “ ‘create[d] a web of offshore entities and a complex
ownership structure to secret the [arbitration] settlement
proceeds and avoid [the district] court’s reach.’ ” (Ibid.) Many of
the alleged components of this scheme took place outside the

                                 35
United States,9 but the plaintiff also alleged numerous RICO
activities involving domestic entities and property in the United
States. (Ibid.) The district court dismissed the complaint on the
grounds that the plaintiff failed to plead a domestic injury. (Id. at
p. 566.) Thus, the only issue before the Ninth Circuit in that case
was “whether the alleged injuries to a judgment obtained by
Plaintiff from a United States district court in California are
domestic injuries such that Plaintiff has statutory standing
under RICO.” (Id. at p. 564.) It concluded that the judgment
existed as property in California and that the plaintiff’s injuries
were domestic. (Id. at p. 567.)
       Even if the court in Smagin had found the allegations in
that case sufficient to plead fraud for purposes of RICO (a
question that was not before it), we see little similarity between
the facts there and those present here. The plaintiff in Smagin
alleged that he had a judgment against the defendant, who
created various foreign entities to keep money that could be used
to satisfy the judgment out of the plaintiff’s hands. Here, the
judgment debtor, Robert, is not alleged to have done anything
beyond agreeing to the SR defendants’ and HWP defendants’
acts. In support of the RICO cause of action, plaintiff continues to
rely on the bald assertion that Robert had an interest in money

9 “For example, [the] plaintiff [in Smagin] allege[d] that [defendant]

received the [arbitration award] through his attorneys in London;
established a trust in Lichtenstein to hold proceeds from the
[arbitration award] (‘the Alpha Trust’); purchased a business
incorporated in Nevis to create additional layers of complexity;
established a bank account in Monaco with Defendant CMB Bank for
that Nevis corporation; and then moved the funds from the Alpha
Trust to that bank account.” (Smagin, supra, 37 F.4th at p. 565.)

                                   36
transferred by SR Capital to the HWP account but fails to argue
any facts that would permit us to conclude that is the case.
Plaintiff therefore fails to carry its burden of establishing a
reasonable possibility that it could state a RICO claim against
the SR defendants.
4.    We decline to remand the matter with instructions to
      correct the judgment.
       Finally, plaintiff contends that, if the judgment is affirmed,
we should remand the matter with instructions to correct the
judgment of dismissal. Plaintiff contends that the purported use
of “etc.” in the judgment is erroneous and suggests that the action
is dismissed as to Robert and the HWP defendants.10
       “The court may, upon motion of the injured party, or its
own motion, correct clerical mistakes in its judgment or orders as
entered, so as to conform to the judgment or order directed . . . .”
(Code Civ. Proc., § 473, subd. (d).) “The test which distinguishes
clerical error from possible judicial error is simply whether the
challenged portion of the judgment was entered inadvertently
(which is clerical error) versus advertently (which might be
judicial error, but is not clerical error).” (Tokio Marine & Fire Ins.
Corp. v. Western Pacific Roofing Corp. (1999) 75 Cal.App.4th 110,
117; Burch v. CertainTeed Corporation (2019) 34 Cal.App.5th
341, 346 [“[a] clerical error results when the order or judgment
misstates the court’s actual intent”].) “Section 473 is addressed to

10 The judgment of dismissal does not include the term “etc.”, as

plaintiff states (without citation to the record), but orders the action
dismissed with prejudice as to “SR Capital LLC, et al.” However, the
court’s minute order sustaining the demurrer was clear that the court
was dismissing the action as to the SR defendants only.

                                   37
the sound discretion of the trial court and the trial court’s order
will not be disturbed absent a showing of clear abuse of
discretion. [Citation.] Whether the error was clerical in nature is
a matter for the trial court to determine.” (Conservatorship of
Tobias (1989) 208 Cal.App.3d 1031, 1035.)
       The record before us does not indicate that plaintiff raised
this issue with the trial court, which has “the authority and the
power to correct” clerical errors even “after a judgment or decree
has become final.” (In re Estate of Goldberg (1938) 10 Cal.2d 709,
714.) Plaintiff fails to identify any authority supporting that this
court may correct a clerical error in a judgment when no motion
was made to the trial court under Code of Civil Procedure section
473, subdivision (d). We therefore decline to remand with
directions to correct the judgment.

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                           DISPOSITION

      The judgment is affirmed. Shlomo and SR Capital shall
recover their costs on appeal.

 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                 LAVIN, Acting P.J.
WE CONCUR:

      EGERTON, J.

      HEIDEL, J.*

* Judge of the Los Angeles Superior Court, assigned by the Chief

Justice pursuant to article VI, section 6 of the California Constitution.

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