Green v. Green CA2/2

Filed 3/13/24 Green v. Green CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

ROBERT GREEN, B321805

Plaintiff and Appellant, (Los Angeles County

Super. Ct. No. 20STCV05251)

v.

PAULA GREEN,

Defendant and

Respondent.

APPEAL from a judgment and order of the Superior Court

of Los Angeles County, William F. Fahey, Judge. Affirmed.

Beach Cities Law Group, Frank Sandelmann and Brennan

Mitch for Plaintiff and Appellant.

Caldwell Law Firm and Larry J. Caldwell for Defendant

and Respondent.

_______________________

Appellant Robert Green contends substantial evidence does

not support the judgment in favor of respondent Paula Green on

his claim that Paula made false claims in multiple fee waiver

applications.1 Robert also challenges the trial court’s finding his

“claim was clearly frivolous, clearly vexatious, or brought

primarily for purposes of harassment” when it granted Paula’s

motion for attorney’s fees under Government Code section 12652,

subdivision (g)(9)(A).

We find substantial evidence supports the trial court’s

finding that Paula did not knowingly make false claims in her fee

waiver applications. We also find substantial evidence supports

the finding that Robert’s claims were frivolous and brought solely

to harass Paula in that they had no reasonable chance of success

and were brought as part of a “sibling feud.”

We affirm the judgment and order.

BACKGROUND

The parties in this case are siblings who have litigated

several claims arising from the probate of their father’s estate.

The trial court provided some background in its June 21, 2021

order disqualifying sibling Attorney Matthew Green from

representing his brother, Robert:

“This case represents the latest chapter in a sibling feud

which goes back several decades. As particularly pertinent to the

instant case, a large judgment against Paula Green was entered

on February 27, 2018 in the Probate Court. See In re the Matter

of Irvin Green, et al., 16STPB01322. The judgment provided that

1 We refer to the parties who share a surname by their first

names for ease of reference and not out of disrespect.

2

Paula’s brothers, Matthew Green (who is a lawyer) and Robert

Green, were the prevailing parties. Thereafter, Matthew and

Robert have vigorously pursued collection efforts against Paula’s

assets.”

The trial court observed, “More recently, Matthew and

Robert decided to try a new strategy against their sister. On

February 10, 2020, Matthew filed the instant ‘qui tam’ complaint

in the name of Robert which purports to be on behalf of the State

of California and the County of Los Angeles. The basis of this

complaint is that Paula allegedly obtained several court fee

waivers based on fraudulent claims of financial distress. The

complaint was initially filed under seal to permit the California

Attorney General’s Office to decide if it had any interest in

intervening. Not surprisingly, the Attorney General declined to

get involved in this family dispute. On December 9, 2020, the

case was unsealed.”

During the three-day bench trial, Robert attempted to

prove his qui tam2 complaint, seeking to establish Paula provided

false information in five fee waiver applications. In these

applications Paula indicated her gross monthly household income

was below $1,761.46, and she did not have sufficient income to

pay her household’s basic needs and the court fees. Robert

provided business records to show Paula’s monthly income

exceeded the $1,761.46 amount because she received numerous

transfers of funds from two companies, Glaser & Weil, LLC, and

Fumar USA, LLC. Robert also introduced expert testimony that

2 “Qui tam is short for ‘qui tam pro domino rege quam pro se

ipso in hac parte sequitur,’ which means ‘who pursues this action

on our Lord the King’s behalf as well as his own.’” (Rockwell Int’l

Corp. v. United States (2007) 549 U.S. 457, 463, fn. 2.)

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such payments are presumed to be taxable income unless they

qualify for an exception under the Internal Revenue Code.

However, the expert conceded he could not opine that the

transfers from the companies were income to Paula without

examining the companies’ general ledgers.

Paula testified the companies were real estate companies

she operated with her mother and the funds she received were

the return of her initial capital contributions. She maintained she

had no income and relied solely on these returns of her prior

contributions for household expenses.

The trial court found in favor of Paula. In its statement of

decision, the trial court concluded Robert had not met his burden

to show the transfers were income. It also noted Paula testified

she had no intent to defraud with her fee waiver applications.

Subsequently, the court granted Paula’s motion for

attorney’s fees, finding the lawsuit was frivolous and brought to

harass Paula. As a result, Robert was ordered to pay attorney’s

fees of $83,700 to Paula.

Robert filed timely notices of appeal of the judgment and

the attorney’s fees order.3

CONTENTIONS ON APPEAL

Robert argues a lack of substantial evidence supports the

findings that the monetary transfers to Paula from the LLC’s did

not constitute income. Additionally, he contends it was an error

of law to require him to prove specific intent to defraud.

3 The notice of appeal for the judgment was filed June 20,

2022, and the notice of appeal for the attorney fees order was

filed September 15, 2022. The appeals were consolidated on

February 27, 2023.

4

Finally, Robert claims the attorney’s fees order should be

reversed, asserting his case was not clearly frivolous, vexatious,

or brought primarily for harassment, as required by Government

Code section 12652, subdivision (g)(9)(A).

DISCUSSION

I. Applicable law and standard of review

On review of a judgment entered after a bench trial, “‘we

review the entire record in the light most favorable to the

judgment to determine whether there are sufficient facts,

contradicted or uncontradicted, to support the judgment.’”

(Patricia A. Murray Dental Corp. v. Dentsply Internat., Inc.

(2018) 19 Cal.App.5th 258, 270 (Patricia A. Murray Dental

Corp.).)

We review findings of fact in the statement of decision for

substantial evidence. (Gomez v. Smith (2020) 54 Cal.App.5th

1016, 1026.) Under this test, “‘“[W]e are bound by the established

rules of appellate review that all factual matters will be viewed

most favorably to the prevailing party [citations] and in support

of the judgment . . . . ‘In brief, the appellate court ordinarily looks

only at the evidence supporting the successful party, and

disregards the contrary showing.’ [Citation.] All conflicts,

therefore, must be resolved in favor of the respondent.”’”

(Patricia A. Murray Dental Corp., supra, 19 Cal.App.5th at

pp. 269-270.)

“Substantial evidence is evidence that is reasonable and

credible. In evaluating the evidence, we accept reasonable

inferences in support of the judgment and do not consider

whether contrary inferences may be made from the evidence.’”

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(Patricia A. Murray Dental Corp., supra, 19 Cal.App.5th at

p. 270.)

Here, the question whether Robert can be ordered to pay

attorney’s fees under Government Code section 12652,

subdivision (g)(9)(A), depends on a finding that his “claim was

clearly frivolous, clearly vexatious, or brought primarily for

purposes of harassment.” This is a mixed question of law and fact

and, when the question is predominantly factual, as it is here, the

determination is reviewed under the substantial evidence test.

(Crocker National Bank v. City and County of San Francisco

(1989) 49 Cal.3d 881, 888.)

II. California’s False Claims Act (CFCA)

Robert claims Paula made false statements about her

income to obtain fee waivers from both the Los Angeles Superior

Court and the Second District Court of Appeal. He brought this

action under CFCA seeking remedies on behalf of the State of

California and the County of Los Angeles, as these fees would

have been paid to these public entities.

“The [CFCA] provides that any person who commits certain

acts against the state or a political subdivision is liable to the

state or political subdivision for treble damages. (Gov. Code,

§ 12651, subd. (a).) Among the prohibited acts are knowingly

presenting or causing to be presented ‘a false claim for payment

or approval’ by the state or a political subdivision, and knowingly

making or using or causing to be made or used ‘a false record or

statement to get a false claim paid or approved.’ (Id., § 12651,

subd. (a)(1), (2).) The [CFCA] also provides that any person who

commits such an act may be liable for a civil penalty of up to

$10,000 for each ‘false claim.’ (Id., § 12651, subd. (a).) Thus, the

act provides for both treble damages for certain acts and a civil

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penalty for each ‘false claim.’” (Fassberg Construction Co. v.

Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th

720, 734-735, fns. omitted.)

Thus, the essential elements of Robert’s CFCA claim are (1)

Paula filed for and received fee waivers and (2) Paula knowingly

made false statements in those fee waiver applications to avoid

paying required court fees. (See Mao’s Kitchen, Inc. v. Mundy

(2012) 209 Cal.App.4th 132, 148.)

When an individual qui tam plaintiff initiates an action

pursuant to Government Code section 12652, subdivision (c)(1),

the qui tam plaintiff brings the action “for the person and . . . for

a political subdivision in the name of the political subdivision.”

Thus, the individual brings the action on behalf of the individual

and the government entity, although the government entity is

only a nominal plaintiff at the time of filing.

III. Substantial evidence supports the finding Paula did

not knowingly make false statements in her fee

waiver applications

Robert, as the qui tam plaintiff, argued Paula obtained fee

waivers by making false statements about her income. He

contends the trial court erred by requiring him to demonstrate

Paula had the specific intent to defraud in her applications.

Provisions of the CFCA require Robert to show Paula had

made false claims “knowingly.” (Gov. Code, § 12651, subd. (a)(4),

(7).) Under the CFCA, “knowingly” means one “[h]as actual

knowledge of the information,” “[a]cts in deliberate ignorance of

the truth or falsity of the information,” or “[a]cts in reckless

disregard of the truth or falsity of the information.” (Gov. Code,

§ 12650, subd. (b)(3).) Proof of specific intent to defraud is not

required. (Ibid.)

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CFCA “was enacted in 1987 and was modeled on the

federal False Claims Act (31 U.S.C. § 3729 et seq.) . . . .” (State of

California ex rel. Standard Elevator Co., Inc. v. West Bay

Builders, Inc. (2011) 197 Cal.App.4th 963, 973.) Accordingly, “it is

appropriate to turn to federal cases for guidance in interpreting

the [CFCA].” (City of Pomona v. Superior Court (2001) 89

Cal.App.4th 793, 802.) “In defining knowingly, Congress

attempted ‘to reach what has become known as the “ostrich” type

situation where an individual has “buried his head in the sand”

and failed to make simple inquiries which would alert him that

false claims are being submitted.’ [Citation.] Congress adopted

‘the concept that individuals and contractors receiving public

funds have some duty to make a limited inquiry so as to be

reasonably certain they are entitled to the money they seek.’”

(U.S. v. Bourseau (9th Cir. 2008) 531 F.3d 1159, 1168.) However,

“Congress specifically expressed ‘“its intention that the act not

punish honest mistakes or incorrect claims submitted through

mere negligence.”’” (U.S. ex rel. Hefner v. Hackensack University

Medical Center (3d Cir. 2007) 495 F.3d 103, 109.)

Paula claimed her income was low enough that her filing

fees should be waived. The process for obtaining a fee waiver is

governed by Government Code sections 68630–68641 and

California Rules of Court, rules 3.50–3.58. Applicants are

required to use form FW-001 to explain their need for a waiver.

Paula stipulated she had applied for and obtained fee

waivers in five cases. In the applications, she used form FW-001

and checked a box in paragraph 5, subsection (b), indicating her

gross monthly household income was less than the $1,761.46

amount listed on the application for a two-person household

(Paula and her mother). Paula also checked the box in paragraph

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5, subsection (c), indicating she did not have enough income to

pay for her household’s basic needs and the court fees. Based on

these statements, she qualified for the fee waivers.

To show Paula violated the CFCA, it was Robert’s task to

show Paula “knowingly” included false statements in her fee

waiver. This required evidence Paula had actual knowledge her

household monthly income exceeded $1,761.46, that she acted in

deliberate ignorance of the truth or falsity of the information, or

acted in reckless disregard of the truth or falsity of the

information.

Robert submitted bank statements showing Paula received

transfers of funds from two companies, Glaser & Weil, LLC, and

Fumar USA, LLC. However, the statements alone, without facts

identifying and explaining each transfer, fail to establish Paula

knowingly made false statements about her monthly household

income.

Robert attempted to use expert testimony from Steven

Jager, a certified public accountant, to meet his burden. Jager

opined that, for federal tax purposes, payments received are

presumed to be taxable income unless they qualify for an

exception. However, Jager admitted he had no experience with

form FW-001 and offered no opinion whether the federal tax

definition of “taxable income” could be used to define “monthly

household income” on form FW-001. Jager also admitted he could

not render an opinion that the transfers from the named

companies were income to Paula without reviewing the

companies’ general ledgers, which he had not done.4

4 Jager testified that withdrawals of capital from an LLC are

not income.

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Paula’s testimony characterized the transfers as returns of

the capital contributions she made to her real estate businesses.

She stated Glaser & Weil, LLC, was a real estate business she

and her mother operated. She added that her mother and she had

made capital contributions of $327,337.33 to the company. Paula

also stated Fumar USA, LLC, was a real estate business to which

she had transferred $165,000 from Glaser & Weil, LLC, as a

capital investment. Paula considered none of the transfers from

Glaser & Weil, LLC, to be income because she had contributed

capital to the company. When asked, Paula testified she had no

income, and her sole source of money was from the two

companies that she used to pay household expenses.

If determined to be credible, this is substantial evidence

that Paula believed the money transfers from the companies were

a return of her capital contributions and not income. No evidence

was presented to show Paula had actual knowledge the money

transfers increased her “household monthly income” to exceed

$1,761.46 or that the transfers were income according to form

FW-001 such that she could pay her household expenses and

court fees. Paula’s testimony showed she believed she was

recovering her own money from the real estate businesses.

Paula’s testimony also showed she had no knowledge the

companies were paying her money that could be considered

income, e.g., payment for services or goods she provided to them.

Instead, her testimony was she believed she was recovering

capital contributions from her businesses. Robert did not offer

evidence that Paula acted in deliberate ignorance of the truth or

falsity of the information about her income or that she acted in

reckless disregard of the truth or falsity of the information about

her income. Robert also failed to provide evidence to show Paula

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“knowingly” made false statements in her fee applications.

Robert’s contention that the trial court implicitly required him to

show specific intent to defraud does not identify reversible error.

Therefore, Paula’s testimony supports the trial court’s

finding that Paula did not violate CFCA.

IV. Substantial evidence supports attorney’s fees award

to Paula

Robert also challenges the order directing him to pay Paula

$83,700 in attorney’s fees. The order was issued pursuant to

Government Code section 12652, subdivision (g)(9)(A), which

authorizes a trial court to award reasonable attorney’s fees to a

prevailing party when the false claim action is “clearly frivolous,

clearly vexatious, or brought primarily for purposes of

harassment.”

The trial court found Robert’s claim frivolous and

harassing. “A claim is clearly frivolous if it is ‘“utterly lacking in

legal merit and evidentiary support.”’ [Citation.] Stated

otherwise, a claim is clearly frivolous ‘when, viewed objectively, it

may be said to have no reasonable chance of success, and present

no valid argument to modify present law.’” (State of California ex

rel. Standard Elevator Co., Inc. v. West Bay Builders, Inc., supra,

197 Cal.App.4th at p. 982.) Harassment too has been found

“when the plaintiff pursues the litigation with an improper

purpose, such as to annoy or embarrass the defendant.”

(Pfingston v. Ronan Engineering Co. (9th Cir. 2002) 284 F.3d 999,

1006.)

Robert offered no evidence of Paula’s monthly household

income and relied on evidence of fund transfers from businesses

Paula operated, without providing facts needed to establish these

transfers were income. No reasonable person would think this to

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be sufficient to establish Paula violated CFCA in her fee waiver

applications. As a result, Robert’s claim had no reasonable chance

of success.

Substantial evidence also supports the finding that Robert’s

claim was brought solely for the purpose of harassment. As the

trial court noted, Robert’s case is “the latest chapter in a sibling

feud which goes back several decades.” The trial court also found

the lawsuit had “little to do with the interests of the State of

California and/or the County of Los Angeles, but more to do with

Matthew and Robert’s desire to perpetuate the bitter battle with

their sister.” In the context of a “sibling feud,” Robert’s pursuit of

a claim like this, with no chance of success, must have been

intended to annoy or embarrass Paula.

Robert claimed, too, that Paula’s motion for sanctions was

untimely. The trial court rejected this argument, finding no

prejudice as Robert was able to file and serve opposition papers,

despite the motion being “late by about one or two days.”

“‘It is well settled that the appearance of a party at the

hearing of a motion and his or her opposition to the motion on its

merits is a waiver of any defects or irregularities in the notice of

motion. [Citations.] This rule applies even when no notice was

given at all. [Citations.] Accordingly, a party who appears and

contests a motion in the court below cannot object on appeal or by

seeking extraordinary relief in the appellate court that he had no

notice of the motion or that the notice was insufficient or

defective.’” (Carlton v. Quint (2000) 77 Cal.App.4th 690, 697.)

Robert filed opposition papers that addressed the merits of

Paula’s motion. He did not ask for a continuance. He did not show

prejudice. He had the opportunity to present argument at the

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hearing. As a result, he waived any defects or irregularities in the

notice of motion.

DISPOSITION

We affirm the trial court’s judgment and order of attorney’s

fees to respondent, who is also awarded her costs of appeal.

________________________

CHAVEZ, J.

We concur:

____________________________

LUI, P. J.

____________________________

ASHMANN-GERST, J.

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