Business Fraud

 In Litigation, Real Estate

1. California Supreme Court Affirms Treble Damages and Attorney’s Fees

Penal Code § 496 cases involving theft apply to civil business disputes where the defendant is alleged to have stolen any form of property.

In the case of Siry Investment L.P. v. Farkhondehpour, S262081 (C.A. Sup. Ct. filed May 8, 2020), the California Supreme Court clarified that the Penal Code § 496 statute applies not only to theft involving stolen property, but also theft related tort involving fraud, misrepresentation, or breach of fiduciary duty. This case originated almost 20 years ago, wherein one of the partners (the defendant) siphoned off rental income through a third party company, thereby defrauding his partners. So, it is criminal fraud per § 496(c) of the Penal Code, thereby allowing the defrauded partners to sue civilly for a violation of Penal Code § 496 and obtain treble damages and attorney’s fees, as well as general damages against the defendant.

2. Court Has Authority to Specifically Enforce a Purchase Agreement Despite Unforeseen Eminent Domain Action Filed on the Property After the Contract was Signed

In the case of Petrolink, Inc. v. Landtel Enterprises, the Appellate Court held that where a trial court issues judgment that governs future actions and possibilities of unforeseen circumstances exist over which the judgment has no control over, the court’s retain authority to modify the judgment when circumstantial changes make it necessary or appropriate to do so. In this case, the trial court had already issued an order for specific performance requiring Petrolink to deposit $948,000 in escrow and Landtel to deliver a grant deed to the property free and clear of all encumbrances. Eleven (11) days after the Appellate Court affirmed that judgment and four days after Petrolink deposited the money into escrow, California Department of Transportation filed an eminent domain action on the contested property. Petrolink refused to close escrow, stating that it would do so only if the property’s title was unencumbered.

The trial court balanced the disturbances of the eminent domain action of both the burden and benefit between the parties. As the Caltrans action made it impossible for Landtel to fulfill its obligation to deliver unencumbered title, the trial court determined that it would be fairer to require Petrolink to complete the transaction and purchase the property despite it being encumbered by the Caltrans eminent domain action.

About the Author

  • Scott Souders
    Scott Souders Attorney & Author


Scott Souders is a real estate attorney who has practiced real estate law in excess of 45 years in Southern California. The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.

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