Nossaman LLP v. Norgaard

NOSSAMAN LLP, Plaintiff and Respondent, v. CHRISTOPHER NORGAARD, Defendant and Appellant.

B291410

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

April 19, 2021

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. Nos. BC534889, BC635527)

APPEAL from a judgment of the Superior Court of Los Angeles County, Gregory Keosian, Judge. Affirmed.

Christopher Norgaard, in pro. per., for Defendant and Appellant.

Herzlich & Blum, Allan Herzlich and Jerome J. Blum for Plaintiff and Respondent.

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INTRODUCTION

Christopher Norgaard appeals from a judgment following a court trial awarding Nossaman LLP $155,524.55. Those funds took a winding and circuitous path to the judgment. Nossaman originally represented Adrian Herling Waworuntu in a fraud action arising from Waworuntu's investment in a real estate project. Norgaard substituted in for Nossaman as counsel for Waworuntu during the litigation. Nossaman sued Waworuntu for unpaid legal fees, obtained a default judgment against him, and filed a lien in a pending action against Waworuntu's interest in, and any eventual recovery from, the fraud action.

Several years later Waworuntu obtained a $12 million judgment in the fraud action, but the defendants in that case were judgment proof. Two of the defendants, however, received a settlement payment as a result of a co-defendant's bankruptcy proceeding in which Waworuntu was an approved creditor. Norgaard eventually received part of that settlement on Waworuntu's behalf and deposited the funds first into his client trust account and then into to his general account. After Nossaman learned of the settlement and payment, Nossaman filed a notice of levy under writ of execution naming Norgaard as a third person in possession of funds subject to Nossaman's judgment against Waworuntu. When Norgaard claimed he did not possess any funds subject to the levy, Nossaman filed this action against him. The $155,524.55 judgment Nossaman obtained is the result of that (and a related) lawsuit.

Norgaard argues the trial court erred in ruling in favor of Nossaman because the original lien in a pending action was not effective, the execution lien against Norgaard did not relate backto the lien in a pending action, Norgaard did not possess or ever receive funds described by the notice of levy, and even if Norgaard possessed funds described by the notice of levy, they were paid to him pursuant to an order issued in the fraud action. Because none of Norgaard's arguments has merit, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Nossaman Files a Lien Against Waworuntu's Interest in a Fraud Action Against the Developers of a Queen Mary Project

In 2003 Nossaman, Guthner, Knox & Elliott, LLP (now Nossaman) represented Waworuntu in a fraud action against Lee H. Durst, Queen's Seaport Development, Inc. (QSDI), Bandero LLC, Cheng Cheng USA, LLC, and others arising from Waworuntu's $12 million investment in a commercial project to develop the Queen Mary ship and the surrounding area. (See Waworuntu v. Durst (Super. Ct. L.A. County, 2005, No. BC303692) (the Durst action).) Waworuntu alleged the defendants fraudulently represented that his investment would enable Bandero and Cheng Cheng to buy the development rights to the property and that the City of Long Beach had already approved the development.

In May 2005 Norgaard substituted in for Nossaman as counsel for Waworuntu in the Durst action. Nossaman sued Waworuntu for unpaid legal fees Waworuntu owed Nossaman for representing him in the Durst action. (Nossaman v. Waworuntu (Super. Ct. L.A. County, 2005, No. BC337925) (the Waworuntu action).) On November 28, 2005 the court in the Waworuntuaction entered a $611,548 default judgment in favor of Nossaman and against Waworuntu.

On March 29, 2006 Nossaman filed in the Durst action a notice of lien in a pending action. (See Code Civ. Proc., § 708.410.)¹ Nossaman served the notice of lien on Waworuntu (who was incarcerated at the time at the Cipinang Prison in Indonesia), Norgaard (who was counsel of record for Waworuntu), and all the parties to the Durst action. In April 2006 Waworuntu moved to set aside the default judgment Nossaman had obtained against him, arguing Nossaman failed to properly serve him. The trial court denied Waworuntu's motion, as well as a subsequent request for reconsideration. Waworuntu did not appeal either ruling.

B. Waworuntu Obtains a $12 Million Judgment in the Durst Action and Receives Funds from Certain Durst Defendants

On September 6, 2011 the trial court in the Durst action entered judgment for Waworuntu in the amount of $12 million and created a constructive trust in favor of Waworuntu. The court's statement of decision in Durst declared: "Insofar as the court has found that Bandero, [Cheng Cheng], Durst, and [another defendant] acquired Waworuntu's $12 million by fraud, Waworuntu is entitled to a constructive trust over that payment, including any assets purchased with the proceeds of those funds." On February 11, 2013 our colleagues in Division Eight affirmed the judgment in the Durst action. (Waworuntu v. Durst (Feb. 11, 2013, B236904) [nonpub. opn.].)

Meanwhile, QSDI filed for bankruptcy and its trustee asserted various claims in federal (district and bankruptcy) court against Bandero and Cheng Cheng, QSDI's co-defendants in the Durst action. Bandero filed a proof of claim against QSDI in the bankruptcy proceeding, and Bandero and Cheng Cheng filed counter- and cross-claims against QSDI in the federal court actions. The directors and officers of QSDI sought insurance coverage for those claims from National Union Fire Insurance Company, which agreed to settle the insureds' disputes with Bandero and Cheng Cheng. As a result of that settlement, National Union agreed to pay $550,000 to Bandero and Cheng Cheng.

On August 26, 2008 Waworuntu filed in the Durst action an application for a writ of attachment to the $550,000 payment National Union had agreed to pay to Bandero and Cheng Cheng. On November 12, 2008 the trial court in the Durst action entered a joint stipulation for temporary protective order providing that National Union would pay the settlement funds due Bandero and Cheng Cheng into the Lee Durst Trust Account and that the account would not disburse any funds "[without] further court order [illegible] to the attorney liens."²

Counsel for Bandero in the Durst action, Allen Matkins Leck Gamble Mallory & Natsis LLP, and an expert consultantretained by Bandero, MBI Liquidation, Inc., also filed liens against the funds paid to Bandero as a result of the settlement in the QSDI bankruptcy. On February 20, 2009 the bankruptcy court issued an order effectively resolving the dispute over the $550,000.³ Under that order, National Union paid approximately $154,000 of the settlement funds into an interest-bearing joint account established by Bandero, Allen Matkins, MBI Liquidation, and Waworuntu, pending resolution of the liens and disputes regarding those funds.⁴ The order prohibited the release, transfer, or withdrawal of funds from the joint account "except pursuant to the joint written instructions . . . or pursuant to an order of a court with jurisdiction over the disputes between the Bandero Parties, on the one hand, and Allen Matkins, MBI and Waworuntu, on the other hand." National Union paid the remainder of the settlement funds into a trust account established by Durst pending the resolution of liens and attachments asserted by Waworuntu and others. The order also prohibited the release of those funds "except pursuant to the joint written instructions of [certain parties, including Bandero and Cheng Cheng] and Waworuntu or pursuant to an order of a court with jurisdiction over the disputes between such parties."

In May 2013 Waworuntu filed a complaint against MBI Liquidation and Allen Matkins, alleging causes of action for declaratory relief, conversion, and "enforcement of constructive trust, judgment and judgment lien" (the MBI action).Waworuntu alleged MBI Liquidation and Allen Matkins refused to agree to disburse to him the $154,000 in settlement funds paid into the joint account. Waworuntu alleged the judgment in the Durst action made him "entitled to immediate and unconditional receipt of all funds held in the Joint Account." Waworuntu also alleged that about $2.5 million of his $12 million investment in the Queen Mary project was placed "directly into a trust account for the direct benefit of, use by and transfer to Allen Matkins, for fees and expenses to be incurred by Allen Matkins on behalf of Bandero, [Cheng Cheng], Lee Durst and [another co-defendant] in defense of [the Durst action]" and more generally that some of his investment funds were diverted to pay Allen Matkins' fees and expenses "incurred on behalf of Bandero and [Cheng Cheng] in the [QSDI] bankruptcy case." Waworuntu alleged that, as a result, the $154,000 in joint account funds were "'assets purchased with the proceeds of [Waworuntu's] funds,' in the words of [the Durst court's] Statement of Decision" and that he was entitled to judgment against Allen Matkins and MBI Liquidation for the full amount of the joint account.

On July 8, 2013 the parties to the MBI action entered into a stipulation under which the full amount of the joint account would be disbursed to Waworuntu ("or to his counsel's trust account"), and MBI Liquidation and Allen Matkins waived and released any claims they had over those funds. The record in this appeal does not reveal the details of how the parties resolved the MBI action, but Norgaard ultimately received and deposited into his client trust account on July 12,...