Filed 4/19/18 Quadri v. Alkayali CA4/3






NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE


AKRAM QUADRI et al.,

Plaintiffs and Respondents,

v.

AHMAD ALKAYALI,

Defendant and Appellant.


G054914

(Super. Ct. No. 30-2008-00113872)

O P I N I O N

Appeal from postjudgment orders of the Superior Court of Orange County, David R. Chaffee, Judge. Affirmed.
Tauler Smith and Robert Tauler for Defendants and Appellant.
Rutan & Tucker, Michael D. Adams, Benjamin C. Deming and Kathryn D. Z. Domin for Plaintiffs and Respondents.
 
I. INTRODUCTION
Ten years ago the trial court ruled that Akram and Fatma Quadri, not Ahmad Alkayali, owned all the stock in NeoCell corporation. This court affirmed that decision in an unpublished decision. (See Quadri v. Alkayali (Mar. 9, 2011, G042758) [nonpub. opn.] (Quadri-1).) In 2016, however, plaintiff Alkayali requested the trial court set aside the verdict on the grounds of extrinsic fraud. Alkayali’s theory was that he had found new evidence showing he was the controlling shareholder of NeoCell – three previously uncalled witnesses and the supposed malingering of a fourth, who did not testify because of ill health. The trial court denied the request and we now affirm. What was conspicuously missing from the moving papers in the set aside motion, and indeed in the briefing on this appeal, is a demonstration of how the Quadris prevented Alkayali from calling any of the three new witnesses the first time. Moreover, the Quadris submitted evidence the fourth witness was genuinely ill.
We further conclude the trial judge did not abuse his discretion in assessing sanctions under section 128.5 of the Code of Civil Procedure based on the frivolousness of the set aside motion.
II. BACKGROUND
Alkayali believes he is the true owner of NeoCell Corpoation, a natural products company based in Irvine. The company was formed in 1998 by Akram Quadri and his wife Fatma on the one hand, and Ahmad Alkayali and his wife Terri, on the other. At the time, each of the four founders agreed to a four-way division of the company’s shares. Alkayali contends, however, that in 2002, in connection with the proposed merger of NeoCell with a corporation Alkayali already owned, there was an amendment
 
to the four-way division. According to Alkayali, the amendment gave him 66 percent of NeoCell’s stock. Quadri testified he never agreed to that amendment.
The dispute culminated in this action, filed by the Quadris a decade ago, seeking to oust Alkayali from NeoCell. After a 10-day trial, with both sides represented by counsel, the trial judge ruled that the Quadris owned all of NeoCell. Alkayali then appealed to this court. In Quadri-1 we affirmed.
In affirming, this court relied substantially on Alkayali’s own testimony at two separate debtor exams, one in 2004 and the other in 2007. In each one, Alkayali testified he did not own any stock in NeoCell; after all, if he had owned any, he would have had to turn it over to his judgment creditors. We also noted that Alkayali’s brief in Quadri-1 did not disclose all the material evidence presented at trial, particularly the evidence in the Quadris’ favor.
Five years later, in December 2016, Alkayali won a favorable jury verdict in Riverside County Superior Court in another case, involving Healthwise Pharmaceuticals. The Healthwise Pharmaceuticals litigation also involved the Quadris. There, the jury found Alkayali owned 72 percent of Healthwise, but the Quadris had breached fiduciary duties to Alkayali by absorbing Healthwise into NeoCell’s operations with no compensation to Alkayali.
The Healthwise litigation made Alkayali aware of four witnesses whom he claimed might have turned the tables at the trial in the Quadri-1 case: (1) Jorge Hodgers; (2) Darren Rude; (3) Anne Montgomery; and (4) Fatma Quadri herself. Claiming extrinsic fraud involving these witnesses, Alkayali filed a motion to set aside the judgment in Quadri-1. The trial judge was unimpressed by Alkayali’s argument – so
 
unimpressed he awarded the Quadris some $34,000 in sanctions to reimburse them for the costs incurred to oppose the set aside motion. Alkayali appeals from those two orders.
III. DISCUSSION
Perhaps inadvertently, but certainly ironically, Alkayali has made the same error in this appeal he made in his first: failing to set forth all the evidence before the trial court, especially the evidence supporting the trial court’s decision. As we pointed out in Quadri-1, “a party must set out in the brief all material evidence, even that which is unfavorable[.]” (Quadri-1, supra, G042758, at p. 10, citing Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881 (Foreman & Clark).)
This time, however, in addition to that omission, he has also failed to prepare a complete record in his appellant’s appendix. He has omitted (as he recognizes in his reply brief) Akram Quadri’s declaration and eight accompanying exhibits. This omission by itself is enough to warrant summary affirmation of the trial court’s decision. (Foreman & Clark, supra, 3 Cal.3d at p. 881.)
Alkayali’s failure to provide this court with a complete record on appeal is particularly relevant in regard to his complaint about Fatma Quadri’s absence at the original trial. Alkayali’s opening brief states, as if it were an established fact, that Fatma faked having breast cancer at the first trial so as to avoid testifying. But what Alkayali did not provide in his appellant’s appendix was the evidence she was actually treated at UCI for breast cancer. While that evidence was provided us in the respondent’s appendix (no doubt out of an abundance of caution), it does not excuse Alkayali’s failure to provide a complete record.
 
Nonetheless, we affirm for a reason more substantive than an inadequate record and brief: Alkayali’s motion and appeal fail to show extrinsic, as distinct from merely intrinsic, fraud.
The dividing line between the two kinds of fraud was explained in Justice King’s exhaustive opinion on the subject in In re Marriage of Stevenot (1984) 154 Cal.App.3d 1051 (Stevenot). The Stevenot court’s distillation of extrinsic fraud was: “Fraud is extrinsic where the defrauded party was deprived of the opportunity to present his or her claim or defense to the court, that is, where he or she was kept in ignorance or in some other manner, other than from his or her own conduct, fraudulently prevented from fully participating in the proceeding.” (Stevenot, supra, 154 Cal.App.3d at p. 1068, italics added.) By contrast: “Any fraud is intrinsic if a party has been given notice of the action and has not been prevented from participating therein, that is, if he or she had the opportunity to present his or her case and to protect himself or herself from any mistake or fraud of his or her adversary, but unreasonably neglected to do so.” (Id. at p. 1069, italics added.)
Stevenot also analyzed the main authority Alkayali relies on in this appeal, Jorgensen v. Jorgensen (1948) 32 Cal.2d 13 (Jorgensen). Jorgensen was a case where extrinsic fraud relief was properly denied, because the alleged fraud (by a husband against a wife as regards the character of certain assets) was intrinsic, not extrinsic: “Confronted with the assertion by one party that assets are separate property, the other party must ascertain her own position as to the character of the property and, if necessary, investigate the facts. A failure to carry out such an investigation results, at best, in intrinsic fraud which is insufficient to set aside the judgment and the marital settlement agreement.” (Stevenot, supra, 154 Cal.App.3d at p. 1062, italics added.)
Any purported fraud presented by Alkayali in this case is intrinsic. Alkayali makes no showing in his briefing that any of the four witnesses on whom he
 
relies for his extrinsic fraud claim could not have been subpoenaed and examined in the trial leading to Quadri-1, except for Fatma. And as for her, the opposition to his motion established that, yes, she really was undergoing breast cancer treatment at the time.
The trial court was thus correct to deny the set aside motion for an absence of a showing of extrinsic fraud. This brings us to the matter of the section 128.5 sanctions.
Section 128.5, subdivision (a), provides: “A trial court may order a party, the party’s attorney, or both, to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.”
Two factors in the present case convince us that the trial court was reasonable in determining sanctions to be appropriate for frivolousness. The most obvious is the utter failure of Alkayali to attempt to confront the most damning facts set forth in this court’s opinion affirming the judgment in Quadri-1 – Alkayali’s two disavowals at debtor examinations in 2004 and 2007 of any ownership interest in NeoCell stock. He was either lying under oath or, if the statements were true, his later assertion of ownership in NeoCell was without foundation. Another is the utter absence of any attempt to show why his counsel in the Quadri-1 litigation was actually prevented from deposing or calling the three witnesses at the first trial. And finally, the absence of any reference to facts showing the “malingering” witness was being treated for breast cancer is indefensible.
 
IV. DISPOSITION
Alkayali presents no challenge to the amount of the sanctions award as overstated or unreasonable. We therefore affirm both that award and the underlying order denying the set aside motion. The Quadris will recover their costs on appeal.





BEDSWORTH, J.

WE CONCUR:



O’LEARY, P. J.



FYBEL, J.