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C.A. Affirms $4 Million Judgment Against Disbarred Former Alhambra Attorney
Opinion Says Family Court Properly Awarded Damages, Interest Against Evie P. Jeang, Who Stole From Client Trust Account Holding Funds During Divorce Proceedings
By a MetNews Staff Writer
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EVIE P. JEANG Former attorney |
Div. Seven of this district’s Court of Appeal has upheld an award of $4.2 million—consisting of $2.5 million in compensatory damages and $1.7 million in prejudgment interest—to a former couple who accused the ex-husband’s previous attorney, Evie P. Jeang, of misappropriating funds from a client trust account containing approximately $4.8 million in home sale proceeds, which was to be held pending resolution of the divorce proceedings.
Jeang was disbarred on Nov. 6 on charges relating to the misappropriation at issue in the case before the Court of Appeal and faces criminal charges for grand theft and embezzlement, filed by the Los Angeles County District Attorney’s Office in September.
The disgraced attorney did not appear at the family court trial on a complaint in joinder, filed by the ex-wife upon discovery that the money was missing, and Jeang’s attorney offered no defense and raised only one objection during the proceeding. Los Angeles Superior Court Judge David I. Wasserman overruled the objection and found for the plaintiffs.
Jeang argued on appeal that the award was unjustified because the complaint did not assert a cause of action for fraud or malfeasance and that the family court lacked subject matter jurisdiction to adjudicate tort claims.
In an unpublished opinion, filed Thursday and authored by Acting Presiding Justice John L. Segal, the court affirmed the judgment. Segal said that Jeang was on notice that fraud was at issue regardless of the labels attached to the causes of action and, as to the jurisdiction of the family court, concluded:
“[A] family court may, in appropriate circumstances, adjudicate claims against third parties related to a pending dissolution action….In a proceeding for dissolution of marriage, the court has broad jurisdiction to inquire into, make orders, and render any judgment concerning the settlement of the property rights of the parties.”
Bad Turn
Segal explained:
“This marital dissolution action between Hong Lu Zhang and Brian Daly took a bad turn, but not because of anything either of them did. As part of their separation, Zhang and Daly sold their family residence [in 2015] and agreed Daly’s attorneys, [Jeang] and her law firm Ideal Legal Group, would hold the sale proceeds (approximately $4.8 million) in the firm’s client trust account until Zhang and Daly finalized their property settlement.”
Jeang initially placed the sale proceeds in a client trust account at Bank of America but made withdrawals over the next two years and eventually closed the account in May 2017, withdrawing the remaining balance of just over $2.5 million and putting it in a new client trust account with East West Bank.
Zhang discovered something was amiss when she asked Jeang for an accounting of the proceeds in October 2021. Jeang submitted a forged East West bank statement showing a balance of $4.5 million as of September 30, 2021; in fact, the account contained only $288,560.
After Zhang’s motion to join Jeang in the dissolution proceedings was granted, she filed a proposed complaint in joinder which alleged that Jeang “diverted, withheld, spent,…misappropriated and/or otherwise converted at least $2,307,375” of the sale proceeds.” The complaint asserted causes of action for conversion and fraud, and requested an accounting and the imposition of a constructive trust.
The causes of action for conversion and fraud were dropped, along with a plea for punitive damages, following objections by Jeang that the family court lacked jurisdiction to hear tort claims.
Daly and Zhang stipulated that the court could award any damages to them jointly.
At the ensuing trial, the former couple asserted that Jeang engaged in “thievery, fraud, and malfeasance” and requested compensatory damages of $2,531,296.22, plus prejudgment interest beginning on May 8, 2017, the date Jeang closed the client trust account at Bank of America and withdrew the remaining funds.
Wasserman found that there was “overwhelming evidence” that Jeang committed “fraud” and “malfeasance.” In addition to the damages and interest, he awarded attorney fees for Zhang, in the amount of $163,441.68, and for Daly, totaling $82,480.40.
Family Court Jurisdiction
Segal addressed Jeang’s assertion that the family court lacked subject matter jurisdiction to adjudicate the tort claims against her, saying that the “argument…relies on misstatements of the record and the law.” He wrote:
“Jeang asserts ‘the trial court ruled that [Zhang and Daly], as part of the subject proceedings, could only sue [Jeang] for an Accounting and for the Imposition of a Constructive Trust.’ But that’s not what happened….[A]fter Zhang sought permission to file a complaint in joinder, Jeang argued the family court did not have jurisdiction to hear Zhang’s causes of action for fraud and conversion. For whatever reason—strategic or otherwise—Zhang withdrew those causes of action. Thus, when the family court granted Zhang’s motion to file the complaint in joinder, the court never ruled on the jurisdiction issue.”
The former attorney cited a single case in support of her legal argument that a family court lacks jurisdiction to adjudicate tort claims. Segal was unpersuaded, noting that the decision dealt with a party who attempted to file the challenged cause of action in family court after the marital dissolution matter was fully resolved.
He said:
“In a proceeding for dissolution of marriage, the court has broad jurisdiction to inquire into, make orders, and render any judgment concerning the settlement of the property rights of the parties….Thus, the family court may, as it did here, join a party ‘who has in his or her possession or control or claims to own any property subject to the jurisdiction of the court in the proceeding.’ ”
Prejudgment Interest
Turning to the award of prejudgment interest, Segal pointed out that Civil Code §3287 provides for such recovery if the damages are “certain, or capable of being made certain by calculation.” Applying this standard, he opined:
“The court did not err in awarding prejudgment interest to Zhang and Daly because their damages were certain or capable of being made certain by calculation. The undisputed evidence (consisting of primarily bank records relating to Jeang’s client trust accounts) was that Jeang received the sale proceeds of $4,831,125.73 in September 2015 and that Jeang made two authorized payments from those proceeds ($250,079.35 to the Internal Revenue Service and $50,000 to Zhang’s first counsel), leaving a balance of $4,531,046.38 owing from Jeang to Zhang and Daly. There was also undisputed evidence counsel for Zhang received a transfer of only $1,999,750.16 from Jeang’s client trust account in March 2022. Thus, Jeang still owed Zhang and Daly $2,531,296.22.”
He continued:
“The family court determined the breach occurred on May 8, 2017—the day Jeang closed her client trust account at Bank of America and withdrew $2,520,372.23—and awarded prejudgment interest from that date to the trial date. The court did not err.
“Jeang’s misappropriation of the sale proceeds began well before May 8, 2017….The family court reasonably concluded Jeang’s misappropriation of the sale proceeds occurred, at the latest, when she closed her client trust account at Bank of America.”
No Pleading Defect
As to the alleged pleading defect, he said that “the record undermines any…suggestion” by Jeang that she was unaware of Zhang’s fraud theory.” Segal noted:
“Although neither of the two causes of action in the complaint in joinder was labeled ‘fraud’ or ‘malfeasance’…, the allegations encompassed and essentially asserted that theory. Zhang alleged that Jeang ‘diverted, withheld, spent, [stole], misappropriated and/or otherwise converted at least $2,307,375’ and that Jeang forged bank records ‘in a deliberate and fraudulent attempt to mislead’ the parties and the court regarding the missing sale proceeds. Zhang also sought ‘compensatory damages for the funds diverted, converted, disposed of and/or misappropriated, according to proof,’ in addition to an accounting and a constructive trust.”
Justices Gail Ruderman Feuer and Natalie P. Stone joined in the opinion.
The case is In re Marriage of Daly and Zhang, B336657.
Carlos V. Yguico of the Bel Air firm of Gemmill, Baldridge & Yguico represented Evie P. Jeang and her former firm, Ideal Legal Group. The attorney on appeal for Daly was Alphonse F. Provinziano of Provinziano & Associates in Beverly Hills. Acting for Zhang were Lee W. Salisbury and Jason Jen-See Lee of the Pasadena firm of Salisbury, Shaw, Lee & Tsuda.
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