Facts

Plaintiff Eftehea Leontaritis obtained a judgment against defendants Antony Koursaris and his business in a prior action for an amount in excess of $3 million. Just after entry of that judgment, Koursaris sold his restaurant business to defendant Shahram Salmasizadeh for $2 million payable by a note for $1 million and the assumption of a $525,000 secured debt and payment of $475,000 in cash. In an effort to collect on her judgment against Koursaris, plaintiff filed a fraudulent transfer action against Salmasizadeh to recover the restaurant and the liquor license.

PLAINTIFF'S CONTENTIONS:
Plaintiff claimed the sale of the restaurant was a fraudulent conveyance in that Salmasizadeh was an insider with knowledge of the judgment, paid less than reasonably equivalent value. Salmsizadeh did not pay the full $2 million purchase price because there was no proof that $400,000 in cash had been paid nor was there any proof the assumed $525,000 debt actually existed, and the $1 million note was discounted by $350,000, which was not supported by adequate consideration, and was designed to put the restaurant out of the reach of plaintiff.

DEFENDANT'S CONTENTIONS:
Salmasizadeh claimed he purchased the restaurant in good faith and for reasonably equivalent value in that he had no knowledge of the judgment against Koursaris prior to his purchase of the restaurant. The $2 million purchase price was a reasonably equivalent value of the business. The assumed debts were legitimate and all amounts due to the seller were paid except for the $350,000 note discount, which could not be challenged as it occurred more than a year after the purchase agreement was signed. Reasonably equivalent value is determined at the time the parties entered into the contract and not in relation to subsequent time. There was no secret agreement or understanding at the outset of the sale transaction to discount the obligation.

Settlement Discussions

Two mediations and one Mandatory Settlement Conference were held. Defendants offered $30,000. Plaintiff demanded $1 million.

Result

Defendant Vergina Cafe Inc.'s and Shahram Salmasizadeh's Motion for Judgment pursuant to Code of Civil Procedure Section 631.8, at the conclusion of plaintiff's case-in-chief was granted. Judgment was entered in favor of defendants with defendants recovering their costs.

Other Information

FILING DATE: May 11, 2011.