Criminal Code Used in Civil Action to Recover Triple Damages and Attorney Fees


When is a breach of contract also fraud? When the party never intended to perform.

So how do you get into the mind of the defendant to determine if he intended to perform when he signed the agreement? Thankfully, California courts have held that the behavior after the contract was signed can be used to show that the defendant never intended to perform. In our case, the defendant borrowed a significant amount of money from our client, and pursuant to the agreement that money was to be invested in a business venture. It was still a loan, but part of the “security” for the loan was that it would be used in the business venture. The money was never repaid, and our client hired us to recovery the money.

But here is where we got really creative. There is a criminal code section that makes it illegal to receive stolen property, and allows a victim to bring a civil action against the criminal to recover three times the value of the stolen property, and to recover all attorney fees. We sued under that section, alleging that the entire loan process had just been a artifice to relief our client of her money. In other words, he stole the money from our client through a bogus business venture, and kept that money for himself.

It's not easy to get judges to understand the interplay of these various causes of action but this judge got it, and tripled the damages, awarding our client three times what she had loaned to the defendant. As a huge bonus, the statute provides that the defendant must pay all attorney fees incurred by the plaintiff. Absent a contract provision, you are not entitled to recover attorney fees under a breach of contract case, and rarely under a fraud claim. Since we used this criminal statute, the court also awarded our client all her attorney fees.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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