Wins

A rogue employee of a title company promoted a Ponzi scheme in which she obtained investments from the appellant, a real estate entrepreneur whom she knew from handling his escrow business. When the scheme collapsed and the appellant purportedly lost about $9 million, he sued the title company, alleging collusion with its employee and the scheme’s principal promoter.

The title company obtained summary judgment on the basis of the appellant’s unclean hands. It relied on issue preclusion based on an unclean hands finding in a prior action involving claims against the appellant arising from the same Ponzi scheme. The appellant resisted summary judgment primarily on the basis that in that prior action, he had settled with the plaintiffs by way of a stipulation under which the trial court vacated the portions of the statement of decision and judgment that contained the unclean hands finding.

The title company hired GMSR to defend the summary judgment on appeal. Agreeing with GMSR, the Court of Appeal rejected the appellant’s array of attacks. It found that the prior judgment was sufficiently final to be preclusive despite having been vacated; that claimed errors in the prior judgment did not limit its preclusive effect; and that the appellant had forfeited many of his arguments either by not urging them at all in the trial court or by not adequately supporting them on appeal.

Click here to read the Court of Appeal opinion:  Meridian Financial Services, Inc. v. Phan (2021) 67 Cal.App.5th 657 [Fourth District, Division 1]