49 Cal.App.5th 797
Cal. Ct. App.2020Background
- Arturo Rubinstein (plaintiff) advanced approximately $874,708.44 to Paris Fakheri (defendant) in 2013 for purchase/renovation of the Boris Drive property; funds were wired/checks from entities Rubinstein owned/controlled (Lanark MK LLC and 19111 Wells Dr., LLC) and from Rick O’Hara & Associates.
- Yoram Yehuda (mutual associate) arranged the financing and told Rubinstein to loan the money to Fakheri; Fakheri provided wiring info to Yehuda and received the transfers.
- Lanark and Wells later assigned any claims against Fakheri to Rubinstein; those entities’ corporate powers were suspended when the assignments occurred but later restored.
- Rubinstein sued Fakheri for a common-count claim for money lent; at trial the court found an implied promise to repay and entered judgment for Rubinstein (principal plus interest), subtracting $100,000 that Fakheri had repaid.
- Fakheri argued on appeal (1) Rubinstein lacked capacity/standing because the assignors were suspended when they assigned; (2) statute of limitations barred recovery; (3) no implied promise because Fakheri did not personally request the loan; (4) statute of frauds barred some liability.
- The trial court and the Court of Appeal held Fakheri forfeited/waived several defenses for not timely asserting them and that the evidence supported an implied promise to repay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Capacity/standing to sue after assignments by suspended corporations | Rubinstein acquired right to sue by assignment; alternatively he personally funded the loan | Assignors (Lanark/Wells) had suspended corporate powers when they assigned, so Rubinstein lacked standing/capacity | Court: assignment gave Rubinstein the claim; suspension makes assignments voidable (not void) and affects capacity not standing; defendant forfeited lack-of-capacity defense by not raising it timely |
| Statute of limitations tolling | Rubinstein: timely / restorative acts cured standing issues | Fakheri: suit barred because assignment occurred while assignors had no capacity so suit didn’t toll SOL | Court: SOL defense forfeited because not tried below / raised too late on appeal |
| Elements of common count (money lent) — must recipient request loan? | Rubinstein: common count can be based on implied promise; no express request or agency proof required | Fakheri: he didn’t personally request the loan; Yehuda arranged it, so no implied promise to repay him | Court: No express request required; equity/implied promise suffices; substantial evidence supports implied promise by Fakheri to repay |
| Statute of Frauds re: third‑party debt | Rubinstein: judgment seeks only principal Rubinstein advanced, not a promise to pay another’s debt | Fakheri: statute of frauds bars liability because Lanark (not Fakheri) was the borrower from O’Hara | Court: Meritless — judgment is for amount Fakheri received/owes to Rubinstein, not a surety promise for another’s debt |
Key Cases Cited
- Philpott v. Superior Court, 1 Cal.2d 512 (1934) (common‑count recovery rests on preventing unjust enrichment; implied promises can arise from circumstances)
- McFarland v. Holcomb, 123 Cal. 84 (1898) (implied promise/recovery may be established without express request when facts show benefit accepted)
- Moya v. Northrup, 10 Cal.App.3d 276 (1970) (common counts are flexible and grounded in equity to prevent unjust enrichment)
- Brown v. Spencer, 163 Cal. 589 (1912) (loan of money gives rise to implied promise to repay)
- Color‑Vue, Inc. v. Abrams, 44 Cal.App.4th 1599 (1996) (distinguishes standing from capacity; lack of capacity to sue can be waived)
- Cal‑Western Business Services, Inc. v. Corning Capital Group, 221 Cal.App.4th 304 (2013) (defense based on suspended corporate powers is a plea in abatement that must be timely raised)
- Yvanova v. New Century Mortgage Corp., 62 Cal.4th 919 (2016) (distinguishes void vs. voidable assignments; borrowers may challenge truly void assignments)
- Traub Co. v. Coffee Break Service, Inc., 66 Cal.2d 368 (1967) (plea in abatement for lack of capacity must be supported by facts at time of plea)