Galaz v. Jackson

Filed 3/16/06 Galaz v. Jackson CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

APPEAL from a judgment of the Superior Court of Los Angeles County. Kenneth R. Freeman, Judge. Affirmed.

Pick & Boydston and Brian D. Boydston for Plaintiff and Appellant.

Law Offices of Eugene Paolino and Eugene Paolino for Defendant and Respondent.

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Plaintiff and appellant Raul Galaz, having successfully defrauded owners of a television program of a large amount of royalty payments, entered into an illegal money-laundering contract with defendant and respondent Julian Jackson. Under their oral agreement, Galaz would give Jackson $59,000 in illicit royalty proceeds, which Jackson would place in an offshore bank account and return the funds in untraceable cash to Galaz, less a five percent commission for himself. Jackson, however, eschewed the commission and kept the cash. Galaz, aggrieved to find so little honor among thieves, sued Jackson for rescission and fraud. Following a bench trial, the court denied relief and ruled in favor of Jackson. The court refused to grant any relief under the illegal contract, and found Galaz's unclean hands precluded the equitable remedy of rescinding the illegal contract. Alternatively, the court found that Galaz's actions on the oral contract and for fraud were barred by the applicable two- and three-year statutes of limitation.^[1]

In his timely appeal, Galaz contends (1) the trial court erred in refusing to rescind the illegal contract, and (2) his claims were not barred by the statutes of limitations. We disagree with the first contention and, therefore, have no reason to reach the second. As our courts have long recognized, an illegal contract may not serve as the foundation of any action, either in law or in equity. This state's courts are not in the business of helping criminals recover the proceeds of their fraudulent schemes.

STATEMENT OF FACTS

Plaintiff's Case

Galaz graduated law school in 1988 and began his practice as a California attorney, specializing in entertainment law at various law firms. Jackson was a music producer. They met sometime between 1996 and 1997, and Galaz became Jackson's attorney and business partner. In 1998, the two formed Artist Rights Foundation, LLC, to collect unpaid royalties on behalf of a recording group called the Ohio Players.

In 1998, Galaz also started a company named Worldwide Subsidy Group to collect film and television royalties from governmental agencies on behalf of producers. Around that time, Galaz offered to collect such royalties for the owners of the television program, â€