Facts

Defendant/cross-complainant Sorour Khalili formed EMBM Corp., a medical billing company. She met plaintiff/cross-defendant Jamshid Ashrafi, who referred clients to EMBM. Over time, Khalili entrusted Ashrafi with her finances, and he promised to protect her assets. The parties formed a new corporation to hold EMBM's assets. Originally the new corporation was named Express Medical Billing Management Inc. but was later changed to Ash Medical Billing Inc. ("Ash"). Though Ashrafi was the sole shareholder of Ash, Khalili owned all of the company's assets because all of company's revenues were derived from services rendered by EMBM.

Payments were deposited into Ash's bank account. Khalili entrusted over $500,000 of EMBM's earnings to Ashrafi over several years, which he claimed he either earned or was entitled to as the shareholder of Ash. Ashrafi represented to Khalili that he was investing the funds in two Santa Monica apartment buildings on her behalf along with funds of his own, and that they would be partners in said buildings. Title in these properties were taken his name only.

Eventually, a dispute arose between the parties. Each party claimed ownership of Ash and its assets, and Ashrafi denied Khalili had any ownership interest in the apartment buildings.

PLAINTIFFS/CROSS-DEFENDANTS' CONTENTIONS:
Plaintiffs contended that Ashrafi owned Ash Medical, while Khalili owned EMBM. Khalili locked them out of his place of business, interfered with his business, converted money and property belonging to Ashrafi, and undercut his contract with Custom Pharmacy, which was the contract owned by Ash Medical.

DEFENDANTS/CROSS-COMPLAINANTS' CONTENTIONS:
Khalili contended that EMBM and Ash always belonged to her; that they did not convert any property belonging to plaintiffs and did not interfere with any of plaintiffs' clients because plaintiffs had no clients; that all medical billing clients were hers; that Ashrafi defrauded Khalili out of hundreds of thousands of dollars, which he converted. Khalili further contended that Ashrafi breached his fiduciary duties to her; that he breached their oral partnership agreement under which she was a 50 percent partner in the two Santa Monica apartment buildings; that she was entitled to a 50 percent interest in both buildings and income derived therefrom; that Ashrafi converted Khalili's personal property; and that he assaulted and battered her on three occasions.

Settlement Discussions

The plaintiffs demanded $100,000 at early mediation. The defendants offered a mutual walk-away. Due to discovery sanctions, plaintiff was prevented from testifying trial. After nonsuit was granted on plaintiffs' complaint, the parties were ordered to attend another mediation. No offers were made. During a voluntary settlement conference before the trial judge before closing arguments, cross-complainants offered to accept $700,000 while cross-defendants offered $75,000 (as per cross-complainants' counsel); $150,000 (as per cross-defendants' counsel).

Damages

Cross-complainants sought economic damages of $2,270,145, non-economic damages of 5,250,000 and punitive damages.

Result

Nonsuit on plaintiffs' complaint. Judgment for defendant/cross-complainant in the amount of $1,169,797.

Other Information

A mediation was held in February 2007 before defendants were served, before retired Judge Lawrence Crispo. The parties attended another mediation during trial following nonsuit on the complaint, before mediator Michael Kahn. No settlement was reached. Following the close of evidence on the trial of the cross-complaint, but before closing arguments, the parties attended a voluntary settlement conference before the trial judge, the Hon. Lisa Hart Cole. Defendants/cross-complainants' discovery motion for evidentiary sanctions was granted, and plaintiffs/cross-defendants were prohibited from testifying during any phase of the trial, including both the complaint and cross-complaint. Defense motion for nonsuit granted after close of plaintiffs' case-in-chief. Judgment for cross-complainants on cross-complaint for $1,169,797 with an express finding of conversion and fraud against cross-defendants. Plaintiffs/cross-defendants filed a motion for new trial on the complaint and cross-complaint. The motion has not been resolved due to the entire action being stayed as a result of plaintiff/cross-defendant Ashrafi's Chapter 11 bankruptcy petition, filed March 17, 2009, the day after judgment was entered. FILING DATE: Jan. 22, 2007.