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March 18, 2026 Get Citation Alerts Download PDF Add Note

Dion v. Weber

California Court of Appeal

• Citations: None known

• Docket Number: G064921

• Opinion

• Authorities (14)

• Cited By (0)

• Summaries (0)

• Similar Cases (5.8K)

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Combined Opinion

Filed 3/18/26

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

DAVID ANTHONY DION et al.,

Plaintiffs and Respondents, G064921

v. (Super. Ct. No. 30-2023-
01313242)
SHIRLEY N. WEBER, as Secretary
of State, etc., OPINION

Defendant and Appellant.

Appeal from an order of the Superior Court of Orange County,
Robert Shawn Nelson, Judge. Affirmed in part and reversed in part as
directed.
Rob Bonta, Attorney General, Thomas S. Patterson, Assistant
Attorney General, Anthony R. Hakl, Anya M. Binsacca and Jeffrey A. Rich,
Deputy Attorneys General for Defendant and Appellant.
Law Offices of Mark A. Redmond, Mark A. Redmond; Salisbury
Legal Corp. and Lawrence J. Salisbury for Plaintiffs and Respondents.

---

The plaintiffs David Anthony Dion et al. (Petitioners) in this
lawsuit were victims of a Ponzi scheme. They filed a lawsuit alleging a single
claim for fraud against two corporations (the corporations) involved in the
scheme and obtained a default judgment against them. Petitioners were
unable to collect the judgment, so they each filed an application with the
defendant Shirley N. Weber, as Secretary of State etc. (the Secretary), for
payment from the Victims of Corporate Fraud Compensation Fund (the fund;
Corp. Code, § 2280 et seq.).1
The Secretary denied payment. Petitioners then petitioned the
trial court for an order compelling the Secretary to pay them from the fund.
The Secretary asserted it had properly denied the applications. Specifically, it
argued Petitioners’ fraud claim in the prior lawsuit was invalid because it
had been filed after the statute of limitations had lapsed. The trial court
rejected this argument and granted the petition. It found the corporations
had waived the statute of limitations defense in the prior lawsuit, which
barred the Secretary from asserting it in the current proceeding.
On appeal, the Secretary primarily contends the trial court erred
by barring its statute of limitations defense. We find the court correctly
rejected this argument and affirm this portion of the order. But we reach this
conclusion through different means than the trial court. As a matter of first
impression, we hold that under the fund’s statutory scheme (§ 2280 et seq.),
the trial court lacked authority to relitigate the merits of Petitioners’ fraud
claim from the prior lawsuit.

1 All further undesignated statutory references are to the

Corporations Code. We also note that since this opinion discusses actions
taken by the Secretary’s office rather than the Secretary in her personal
capacity, we use the pronouns “it” and “its” when referring to the Secretary.

2
However, we agree with the Secretary that the trial court’s order
granting the petition violates section 2289, subdivision (a). This statute
provides that the fund cannot pay more than $50,000 to any claimant for a
single judgment. Here, the court’s order appears to award certain Petitioners
more than $50,000 from the fund, so we reverse this portion of the order. On
remand, we direct the court to enter a new order that complies with the
monetary limits of section 2289, subdivision (a).
FACTS AND PROCEDURAL HISTORY
I.
TERMINOLOGY
Generally, lawsuits to compel the Secretary to make payment
from the fund consist of three separate phases. The terminology used to
describe these phases and the events within them is critical to understanding
the relevant statutory scheme. Thus, we begin by defining some of the terms
used in this opinion.
We refer to a person that submits a claim to the Secretary for
payment from the fund as a “claimant” or “petitioner.”
As for the different phases, the first phase is the initial lawsuit
in which a claimant obtains a judgment against the corporation “based upon
[its] fraud, misrepresentation, or deceit.” (§ 2282, subd. (a).) We generally
refer to this initial lawsuit as the “underlying lawsuit,” the causes of action
asserted therein as the “underlying causes of action,” and the resulting
judgment as the “final judgment.”
The second phase is the claimant’s application to the Secretary
seeking payment from the fund of the unpaid portion of the final judgment.

3
(See § 2282, subd. (a).) We refer to a claim seeking payment from the fund as
a “payment claim.”
The third phase follows the Secretary’s denial (in whole or in
part) of a claimant’s application. In this phase, the claimant files a verified
petition with the superior court for an order directing the Secretary to make
payment from the fund. (§ 2287, subd. (a).) We generally refer to this verified
petition as a “petition.” Since the cause of action asserted in the petition
seeks an order for payment from the fund, we also refer to it as a “payment
claim.”2
Definitions for the specific underlying lawsuit, underlying causes
of action, and final judgment involved in this appeal will be provided below.
II.
THE UNDERLYING LAWSUIT
Petitioners are a subset of the more than 170 former plaintiffs
who filed the lawsuit entitled Andalon, et al. v. Pacific Housing and
Development Corp., et al. (Super.Ct. Orange County, 2021, No. 30-2020-
01154306) (the Andalon lawsuit), against the corporations on August 7,
2020.3 The complaint in the Andalon lawsuit (Andalon complaint) asserted a
single fraud claim, alleging that the corporations’ respective presidents, John

2 A “cause of action” is “[a] group of operative facts giving rise to

one or more bases for suing; a factual situation that entitles one person to
obtain a remedy in court from another person . . . .” (Black’s Law Dict. (12th
ed. 2024) p. 275, col. 1.)
3 Petitioners are David Anthony Dion, Harold Hatakeda, Richard

Leeds, John and Kathy Rabe, The Mountain Trust, Charlotte Small Trust,
Robert Thomas, Andre Ting, Vana Family Trust, Joseph Vana, Elsie
Watkins, Linda Whelan, Jin Woo, Allan Schwartz, and The Myron Bank
Trust.

4
Packard and Michael Stewart, had used the corporations to carry out a
massive Ponzi scheme.
The corporations failed to respond to the Andalon complaint,
resulting in the entry of default against them. The trial court then entered a
default judgment against the corporations in the total amount of
$8,642,166.34 (the Andalon judgment). From this total amount, the Andalon
judgment awarded specific sums to each plaintiff, which ranged from $5,000
to $80,782.
III.
PETITIONERS’ PAYMENT CLAIMS
The fund is administered by the Secretary “for the sole purpose of
providing restitution to the victims of a corporate fraud.” (§ 2280.) Victims
can apply for restitution from the fund after obtaining a final judgment
against a corporation “based upon the corporation’s fraud, misrepresentation,
or deceit, made with intent to defraud.” (§ 2282, subd. (a).) The specific
application requirements will be discussed later in this opinion.
Based on the Andalon judgment, each Petitioner filed an
application with the Secretary for payment from the fund in December 2021.
The Secretary responded with a letter noting several deficiencies in the
applications. As relevant here, the Secretary questioned whether the Andalon
judgment was “based on a valid claim for corporate fraud.” In particular, the
Secretary observed that Packard and Stewart were indicted for fraud in 2014,
but the Andalon lawsuit was not filed until 2020. Thus, it requested evidence
that the Andalon fraud claim had not been barred by the applicable three-
year statute of limitations (Code Civ. Proc., § 338, subd. (d)), including
evidence “that there was no duty to investigate before August 7, 2017” (i.e.,
three years before the Andalon lawsuit was filed).

5
Petitioners replied that “[t]he statute of limitations issue you
raise was pled in the [Andalon] complaint . . . . [Citation.] “‘A defendant’s
failure to answer the complaint admits the well-pleaded allegations of the
complaint, and no further proof of liability is required.’”
The Secretary and Petitioners exchanged several more letters.
The former continued to request more evidence that the Andalon fraud claim
had not been time-barred when the Andalon lawsuit was filed. The latter
maintained they had no knowledge of the corporations’ involvement in the
fraudulent Ponzi scheme until 2018.
The Secretary denied each Petitioner’s payment claim in
September 2022. It explained that Petitioners had “failed to meet their
burden of showing that the default judgment submitted in support of the
Applications was based on a valid cause of action for corporate fraud.” The
denial letter also noted several other deficiencies, none of which are material
to this appeal.
IV.
THE PETITION AT ISSUE
In March 2023, Petitioners filed a verified petition in the trial
court seeking an order directing the Secretary to pay them from the fund.
After the Secretary’s demurrer was overruled, Petitioners filed a trial brief.
The Secretary then filed an answer to their petition and a separate opposition
to the trial brief.
The Secretary’s opposition argued that the Andalon fraud claim
was time-barred. Petitioners’ fraud claim was based on investments made in
2008 and 2009, and the Andalon complaint had admitted that (1) Packard
and Stewart were indicted for various fraud-related crimes in September
2013, (2) Packard pleaded guilty to these claims in 2014, (3) Stewart was

6
convicted of them in 2015, and (4) Packard and Stewart were ordered to pay
restitution in 2016. Accordingly, the Secretary claimed that Petitioners’ duty
to investigate the Andalon fraud claim had arisen by at least 2016, and the
claim’s three-year limitations period had lapsed prior to the Andalon
lawsuit’s filing in August 2020.
Following a hearing, the trial court issued an order granting the
petition at issue (the order). It found Petitioners had established the Andalon
judgment was “based on a valid cause of action against the corporations . . .
for fraud, misrepresentation, or deceit,” and had complied with section 2282’s
procedural requirements.
The trial court was unpersuaded by the Secretary’s statute of
limitations argument. It observed, the “Secretary cites no authority providing
that [it] can resurrect a statute of limitations defense that has otherwise been
waived by the [corporations], and the court is aware of none. Because the
limitations defense can be waived – and was, in fact, waived by the
[corporations] in the underlying Andalon [lawsuit] – that defense does not
affect the validity of Petitioner’s [sic] corporate fraud claim.” The court also
rejected the Secretary’s other arguments.
In this appeal of the order, the Secretary primarily claims that
the trial court erred by barring its statute of limitations defense. In the
alternative, the Secretary contends the matter must be remanded so the trial
court can specify the exact amounts to pay each Petitioner from the fund. We
disagree with the first argument but agree in part with the second.4

4 The Secretary claims to be appealing a judgment in this case.

However, the record only appears to contain the order. We have not seen a
judgment in the record, nor has the Secretary explained why the order should
be treated as a judgment.

7
DISCUSSION
I.
THE STATUTORY SCHEME
A. The Fund
“The Legislature created the Fund in 2002, as part of the
California Corporate Disclosure Act . . . , for ‘the sole purpose of providing
restitution to the victims of a corporate fraud.’ [Citation.] The Fund is
sustained largely by corporate disclosure fees, paid by each corporate entity
when filing its annual statement of information. [Citation.] It is administered
by the Secretary. [Citation.] The statute initially required the Secretary to
‘adopt regulations regarding the administration of the [F]und and the
eligibility of victims to receive compensation from the [F]und.’” (Alves v.
Weber (2025) 111 Cal.App.5th 99, 109–110 (Alves).)
In 2012, the Legislature passed Senate Bill No. 1058 (SB 1058),
which “‘revise[d] and recast’ the regulations promulgated by the Secretary
and codified the requirements to receive compensation from the Fund.
[Citation.] The impetus behind this change was to streamline the process, as
the Secretary’s ‘regulations [we]re burdensome and often [led] to unnecessary
delay in payments of compensation and result[ed] in underutilization of the
Fund.’ [Citation.] The delayed payments ‘only continue[d] to victimize the
exact people whom the Fund was created to benefit.’” (Alves, supra, 111
Cal.App.5th at p. 110.)
Under the current statutory scheme, “‘[w]hen an aggrieved
person obtains a final judgment in a court of competent jurisdiction against a
corporation based upon the corporation’s fraud, misrepresentation, or deceit,
made with intent to defraud,’” the person may submit a payment claim by
filing an application with the Secretary. (§ 2282, subd. (a).) Before filing such

8
an application, the claimant must “make[] ‘diligent collection efforts’ for the
amount unpaid on the judgment.” (Alves, supra, 111 Cal.App.5th at p. 110.)
Payments from “the fund shall not exceed fifty thousand dollars ($50,000) for
any one claimant per single judgment.” (§ 2289, subd. (a).)
An application must be delivered to the Secretary within 18
months of the final judgment. (§ 2282, subd. (b).) The requirements for the
application are contained in section 2282, subdivision (c), which we will
discuss in detail below. (§ 2282, subds. (c)(1)-(8).) “If the final judgment . . .
was by default, stipulated, a consent judgment, or pursuant to Section 594 of
the Code of Civil Procedure or if the action against the corporation or its
agent was defended by a trustee in bankruptcy, the Secretary . . . may
request additional documents and information from the claimant to
determine whether the claim is valid.” (§ 2282, subd. (d)(2).)
If the Secretary deems an application incomplete, it must send
the claimant a list of deficiencies. (§ 2283, subd. (a).) Once an application is
complete, the Secretary “may deny or grant the application or may enter into”
a settlement with the claimant to pay less than the claim’s full amount.
(§ 2284, subd. (b).) It must issue a final written decision within 90 days of
receiving the completed application. (§ 2284, subd. (a).)
B. The Petition
If the Secretary denies the application, the claimant has six
months to submit a petition to the superior court. (§ 2287 subd. (a).) The
Secretary has 30 days to respond to a petition. (§ 2287, subd. (c).) Upon the
claimant’s request, the trial court will set an evidentiary hearing, in which
the claimant has “the burden of proving compliance with the requirements of
Section 2282 by competent evidence at an evidentiary hearing. The claimant
[is] entitled to a de novo review of the merits of the application as contained

9
in the administrative record.” (§ 2287, subd. (d).) In ruling on a petition, the
trial court “shall order payment out of the fund only upon a determination
that the [claimant] has a valid cause of action within the purview of Section
2282, and has complied with Section 2287.” (§ 2288, subd. (a).)
Section 2288, subdivision (b), establishes a dual-track system for
trial courts to evaluate petitions. The applicable track is based on the manner
in which the final judgment was obtained, and each track imposes a different
burden of proof for establishing the required showing of fraud,
misrepresentation, or deceit.
The first track is contained in section 2288, subdivision (b)(1). It
generally applies to final judgments arising from contested adversarial
proceedings in which the court resolved disputed issues. Under this track, the
petitioner has the benefit of a rebuttable presumption that the final judgment
arose from the corporation’s fraudulent activity. This subdivision provides,
“[t]he Secretary . . . may defend any action on behalf of the fund and shall
have recourse to all appropriate means of defense and review, including
examination of witnesses and the right to relitigate any issues that are
material and relevant in the proceeding against the fund. The claimant’s
[final] judgment shall create a rebuttable presumption of the fraud,
misrepresentation, or deceit by the corporation, which presumption shall
affect the burden of producing evidence.” (§ 2288, subd. (b)(1).)
The second track is set forth in section 2288, subdivision (b)(2). It
applies “[i]f the civil judgment, arbitration award, or criminal restitution
order in the underlying action on which the final judgment in favor of the
petitioner was by default, stipulation, consent, or pursuant to Section 594 of
the Code of Civil Procedure, or if the action against the corporation or its
agent was defended by a trustee in bankruptcy . . . .” (§ 2288, subd. (b)(2).)

10
The burden of proof is switched in this track. Rather than getting the benefit
of a rebuttable presumption, “the petitioner [has] the burden of proving that
the cause of action against the corporation or its agent was for fraud,
misrepresentation, or deceit.” (§ 2288, subd. (b)(2).)
II.
STATUTORY INTERPRETATION
A. Background
The Secretary contends that the trial court erred by finding it
could not assert the statute of limitations as a defense. Its argument is
primarily rooted in section 2288, subdivision (a), which directs lower courts to
“order payment out of the fund only upon a determination that the [claimant]
has a valid cause of action within the purview of Section 2282 . . . .” (Italics
added.) The Secretary interprets “valid cause of action” to mean the
underlying cause of action, i.e., the Andalon fraud claim here. Thus, the
Secretary maintains its statute of limitations defense was relevant to
assessing whether the Andalon fraud claim was “a valid cause of action”
under this statute.
The Secretary’s argument requires us to interpret the meaning of
section 2288, subdivision (a), as well as the surrounding statutory scheme.
Questions of statutory interpretation are reviewed de novo. (Segal v. ASICS
America Corp. (2022) 12 Cal.5th 651, 658.) The goal of statutory
interpretation, “‘is to ascertain the intent of the lawmakers so as to effectuate
the purpose of the statute.’ [Citation.] We begin as always with the statute’s
actual words, the ‘most reliable indicator’ of legislative intent, ‘assigning
them their usual and ordinary meanings, and construing them in context.’”
(Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC
(2015) 61 Cal.4th 830, 837–838.)

11
“When the plain meaning of the statutory text is insufficient to
resolve the question of its interpretation, the courts may turn to rules or
maxims of construction ‘which serve as aids in the sense that they express
familiar insights about conventional language usage.’ [Citation.] Courts also
look to the legislative history of the enactment. ‘Both the legislative history of
the statute and the wider historical circumstances of its enactment may be
considered in ascertaining the legislative intent.’ [Citation.] Finally, the court
may consider the impact of an interpretation on public policy, for ‘[w]here
uncertainty exists consideration should be given to the consequences that will
flow from a particular interpretation.’” (Mejia v. Reed (2003) 31 Cal.4th 657,
663.)
“‘[C]ourts should liberally construe remedial statutes in favor of
their protective purpose’ [citations], while remaining mindful that liberal
construction of remedial statutes ‘does not mean that a court may read into
the statute that which the Legislature has excluded, or read out that which it
has included.’” (Alves, supra, 111 Cal.App.5th at p. 109.)
Though our analysis of the relevant statutory scheme differs from
the trial court, we affirm the order. (Travis v. Brand (2023) 91 Cal.App.5th
996, 1006 [appellate courts review the trial court’s ruling, not its reasoning].)
We disagree with the Secretary’s interpretation of section 2288,
subdivision (a), based on the statute’s text, the surrounding statutory
scheme, certain maxims of construction, the relevant legislative history, and
public policy. As we explain, “cause of action” in section 2288, subdivision (a),
refers to a payment claim, not the underlying causes of action. In other
words, this statute directs the trial court to perform a limited inquiry into
whether the claimant submitted a valid payment claim to the Secretary. It

12
does not authorize the Secretary to relitigate the merits of the underlying
causes of action.5
B. Verb Tense
The term “cause of action” is only used twice in section 2288. It
appears in section 2288, subdivision (a), and again in section 2288,
subdivision (b)(2). Different verb tenses are used in each instance. “In
construing statutes, the use of verb tense by the Legislature is considered
significant.” (Hughes v. Board of Architectural Examiners (1998) 17 Cal.4th
763, 776.)
Section 2288, subdivision (a), authorizes the trial court to order
payment from the fund where “the aggrieved party has a valid cause of action
within the purview of Section 2282.” (Italics added.) Notably, this subdivision
uses the present tense “has” in referring to “cause of action.” In contrast,
section 2288, subdivision (b)(2), uses the past tense in connection with “cause
of action.” It states that if the final judgment was obtained through certain
means like by default or stipulation, “the petitioner shall have the burden of
proving that the cause of action against the corporation or its agent was for
fraud, misrepresentation, or deceit.” (§ 2288, subd. (b)(2), italics added.)
A “‘statute’s use of two verb tenses . . . indicates that two time
periods are involved.’” (In re Valerie A. (2007) 152 Cal.App.4th 987, 1008.)

5 Section 2288, subdivision (a), also requires petitioners to comply

with section 2287 in filing their petitions. Under section 2287, subdivision (a),
petitioners must (1) file their petition within six months of the Secretary’s
denial of their payment claim, (2) file their petition in the correct superior
court (§ 2287, subd. (a)), (3) serve a copy of the petition on the Secretary and
file a proof of service with the court (§ 2287, subd. (b)), and (4) prove
compliance with section 2282’s requirement (§ 2287, subd. (d)). The first
three requirements are not relevant to this appeal.

13
Section 2288, subdivision (b)(2)’s use of past tense and the surrounding
context indicate that the “cause of action” to which it refers is the underlying
cause of action, which must be based in fraud, misrepresentation, or deceit.
Since section 2282, subdivision (a), uses the present tense “has,” we can infer
that “cause of action” in this subdivision refers to a cause of action asserted in
a different time period, i.e., the current payment claim in the petition. The
trial court’s review of such a payment claim is limited in scope, as we explain
next.
C. Limited Scope of Review
1. Interplay with section 2282
The trial court’s review of a “cause of action” under section 2288,
subdivision (a), is also expressly tied to section 2282, which outlines the
application requirements for payment claims to the Secretary. Specifically,
section 2288, subdivision (a), directs the trial court to order payment from the
fund where “the [claimant] has a valid cause of action within the purview of
Section 2282.” (Italics added.) Similarly, section 2287 instructs claimants to
file petitions “based upon the grounds set forth in the application to the
Secretary of State.” (§ 2287, subd. (a).) And after filing a petition, “[t]he
claimant shall have the burden of proving compliance with the requirements
of Section 2282 by competent evidence at an evidentiary hearing. The
claimant shall be entitled to a de novo review of the merits of the application
as contained in the administrative record.” (§ 2287, subd. (d), italics added.)
Thus, we must explore the requirements of section 2282 to understand the
scope of the court’s review of a petition.
Under section 2282, subdivision (a), to be eligible for payment
from the fund, a claimant must obtain “a final judgment . . . based upon the
corporation’s fraud, misrepresentation, or deceit, made with intent to

14
defraud.” If the claimant is unable to collect the final judgment from the
judgment debtor after making “diligent collection efforts,” he or she may
apply to the Secretary “for payment from the fund . . . for the amount unpaid
on the judgment that represents the awarded actual and direct loss, any
awarded compensatory damages, and awarded costs to the claimant in the
final judgment, excluding punitive damages.” (§ 2282, subd. (a).)
The specific information to be included in applications to the
Secretary is contained in section 2282, subdivision (c). The application must
be made on a designated form and include:
• The claimant’s name and address. (§ 2282, subd. (c)(1).)
• Contact information for the claimant’s attorney or the claimant’s phone
number if unrepresented. (§ 2282, subd. (c)(2).)
• The corporation’s name and address. (§ 2282, subd. (c)(3).)
• Identification of the final judgment, the amount that remains
unreimbursed, and “an explanation of the [payment] claim’s
computation.” (§ 2282, subd. (c)(4).)
• Copies of the final judgment and the underlying complaint plus any
amendments. (§ 2282, subd. (c)(5).)
• For criminal restitution orders only, the claimant must “provide the
charging document and the restitution order.” (§ 2282, subd. (c)(6).)
• A description of the steps taken to identify the judgment debtor’s assets
that could be used to satisfy the final judgment. (§ 2282, subd. (c)(7).)
• Representations from the claimant that the final judgment (1) “was for
fraud, misrepresentation, or deceit by a corporation . . . with the intent
to defraud,” (2) is wholly or partially unpaid, and (3) has not been
discharged in bankruptcy or is not potentially subject to discharge if
there is an open bankruptcy case. (§ 2282, subd. (c)(8).)

15
Significantly, none of the above categories reasonably include
information about the merits of the underlying causes of action. And the
Secretary cannot deny a claim due to a claimant’s failure to provide
information outside the above categories. Section 2282, subdivision (d)(1),
expressly bars the Secretary from doing so unless an enumerated exception
applies: “Except as provided in paragraphs (2), (3), and (4), the Secretary . . .
shall not condition an award of payment from the fund upon a claimant
providing any additional information or documents other than those
prescribed in [section 2282] subdivision (c).” (§ 2282, subd. (d)(1), italics
added.)
Thus, absent an exception, the Secretary was precluded from
denying Petitioners’ payment claim based on their alleged failure to show
that the Andalon fraud claim was not time-barred.
2. Exceptions to section 2282, subdivision (d)(1)
There are three scenarios in which the Secretary can request
information outside the categories prescribed in section 2282, subdivision (c).
(§ 2282, subds. (d)(2)-(4).) Two do not apply here. One concerns a final
judgment that fails to state the amount awarded for “actual loss and
compensatory damages” (§ 2282, subd. (d)(3)), and the other applies when
there is no finding of “the insolvency of the judgment debtor or lack of assets
to pay the claimant” (§ 2282, subd. (d)(4)).
The remaining exception in section 2282, subdivision (d)(2),
states that if the final judgment “was by default, stipulated, a consent
judgment, or pursuant to Section 594 of the Code of Civil Procedure or if the
action against the corporation or its agent was defended by a trustee in
bankruptcy, the Secretary of State may request additional documents and

16
information from the claimant to determine whether the claim is valid.”
(Italics added.)
The Secretary appears to believe that the statute of limitations
can be asserted to assess the validity of “the claim” under the above
exception. In other words, it equates “the claim” to the underlying causes of
action. We disagree. The term “the claim” appears three other times in
section 2282, all in reference to a payment claim and not the underlying
causes of action. Section 2282, subdivision (c)(8)(C), requires a claimant’s
application to represent “[t]hat the judgment underlying the claim meets the
requirements of [section 2282] subdivisions (a) and (b).” (Italics added.)
Likewise, section 2282, subdivision (c)(4), requires a claimant to identify “the
final judgment, the amount of the claim that remains unreimbursed from any
source, and an explanation of the claim’s computation.” (Italics added.) We
should apply the same meaning to “the claim” throughout all of section 2282.
(Hassan v. Mercy American River Hospital (2003) 31 Cal.4th 709, 716.) Thus,
“the claim” referenced in section 2282, subdivision (d)(2), should also refer to
a payment claim.6
Moreover, other sections in the relevant statutory scheme
demonstrate that “the claim” refers to a payment claim, not the underlying
causes of action. (Hassan v. Mercy American River Hospital, supra, 31
Cal.4th at pp. 715–716.) Section 2284, subdivision (b), states the Secretary
“may deny or grant the application or may enter into a compromise with the
claimant to pay less in settlement than the full amount of the claim. If the
claimant refuses to accept a settlement of the claim offered by the [Secretary],

6 Unlike “cause of action,” which was used twice in section 2288,

there are no verb tense discrepancies in the use of “the claim” in section 2282.

17
the written decision of the [Secretary] shall be to deny the claim.” (Italics
added.) Likewise, section 2283, subdivision (b), provides that if a dispute
arises between the Secretary and claimant as to “whether the application is
complete, the claimant may immediately file the claim with the court
pursuant to Section 2287.” (Italics added.)
In sum, the exception in section 2282, subdivision (d)(2), only
allows the Secretary to “request additional documents and information from
the claimant to determine” whether the payment claim at issue is valid.
(Italics added.) It does not authorize the Secretary to request information
concerning the validity of the underlying causes of action. As such, the
Secretary cannot deny payment claims based on a claimant’s failure to
provide information on the merits of the underlying causes of action. (§ 2282,
subd. (d)(1).)
To the extent the Secretary believes that determining the validity
of a payment claim under section 2282, subdivision (d)(2), includes review of
the merits of the underlying causes of action, we again disagree. As discussed
above, no other subdivision in section 2282 requires a claimant to prove the
validity of the underlying causes of action. And we do not think the
Legislature intended section 2282, subdivision (d)(2), to drastically expand
the scope of the Secretary’s review. (See Alves, supra, 111 Cal.App.5th at p.
109 [courts should liberally construe remedial statutes in favor of their
protective purpose]; Hsu v. Abbara (1995) 9 Cal.4th 863, 871 [courts should
adopt a statutory construction that best serves to harmonize the statute
internally].) Further, this argument is belied by SB 1058’s legislative history.
D. Legislative history
SB 1058’s legislative history also indicates that the Legislature
intended for the Secretary and trial court to conduct a limited review of a

18
payment claim to determine whether it meets section 2282’s requirements.
The Legislature enacted SB 1058 to simplify and streamline the application
process to make it easier for fraud victims to get paid from the fund. (Alves,
supra, 111 Cal.App.5th at pp. 110–111.)
“[A]fter the Fund had been in place for about a decade,” the
Legislature passed SB 1058 to “revamp[] the statutory framework over
concerns that the Fund was underutilized and that corporate fraud victims
faced delays and obstacles in obtaining relief.” (Alves, supra, 111 Cal.App.5th
at pp. 116–117.) SB 1058 was drafted in response to a newspaper article
detailing fraud victims’ difficulty getting paid from the fund. The article
“reveal[ed] a lengthy saga of frustrated communication” between the victims
and the Secretary. (Sen. Rules Com., Off. Of Sen. Floor Analyses, Analysis of
Sen. Bill No. 1058 (2011-2012 Reg. Sess.) as amended Aug. 28, 2012, p. 6
(Senate Analyses).) “The correspondence suggest[ed] that there [was]
significant room for improving the rules governing the victims’ application
process, as well as the process by which the [Secretary] evaluate[d]
applications, deem[ed] them complete, and disburse[d] money from the Fund.
Existing shortcomings . . . created procedural hurdles, which blocked timely
access to the Fund by [corporate fraud] victims.” (Senate Analyses, p. 6.) In
response, SB 1058 “add[ed] new statutory language to facilitate approval of
valid claims from the Fund.” (Senate Analyses, p. 2.)
Nothing in SB 1058’s legislative history indicates the Legislature
intended for either the Secretary or the trial court to review the merits of the
underlying causes of action when evaluating a payment claim. The legislative
history is silent as to this issue. In drafting the application requirements, the
Legislature was primarily concerned with the claimant providing the
Secretary with (1) a copy of the final judgment and underlying complaint “for

19
a finding of fraud, misrepresentation, or deceit, made with the intent to
defraud” and (2) a description of the attempts to uncover judgment debtor
assets that could be used to satisfy the final judgment. (Senate Analyses,
p. 4.) Nothing indicates the Legislature intended the claimant to submit
information concerning the merits of the underlying causes of action.
Rather, SB 1058’s legislative history indicates that the
Legislature intended for the trial court to conduct a limited review of
petitions to determine whether a claimant had submitted a valid application
to the Secretary. It was intended to “[p]ermit[] a claimant whose application
for compensation from the Fund is denied by the [Secretary] to petition a
court . . . for de novo review of the merits of the application based on the
administrative record.” (Senate Analyses, p. 5, italics added; see § 2287, subd.
(d).)
Finally, nothing in SB 1058’s legislative history suggests that the
Legislature even considered whether the Secretary could review the merits of
the underlying causes of action. As part of the drafting process for SB 1058,
the Legislature studied the Secretary’s then existing procedures for
approving and denying payment claims. It found that the Secretary had
denied 103 payment claims as of October 2011. (Senate Analyses, p. 7.) The
Legislative History includes a chart explaining the Secretary’s reasons for

20
these denials. Significantly, none of these reasons appear to relate to the
merits of the underlying causes of action.

(Senate Analyses, pp. 7-8.)
If the Secretary had been denying payment claims based on the
merits of the underlying causes of action before SB 1058’s enactment, we
might infer that SB 1058’s silence on this issue was a tacit endorsement of
this practice. But, given the above chart, we cannot make this inference.
Instead, it appears SB 1058 was silent on this issue because the Legislature
did not anticipate that the Secretary would begin denying payment claims on
this ground after its enactment. Nothing in SB 1058’s text or legislative
history indicates the Legislature sought to introduce this new ground for
denying a payment claim. And allowing the Secretary to relitigate the merits
of the underlying causes of action would be a time consuming process that
would undermine SB 1058’s goal to expedite the application process.

21
E. Public Policy
Finally, as a matter of public policy, it makes little sense for the
Secretary and the trial court to relitigate the merits of an underlying cause of
action that was already adjudicated in the final judgment. For instance, the
doctrine of claim preclusion (also known as res judicata) “provides that ‘a
valid, final judgment on the merits precludes parties or their privies from
relitigating the same “cause of action” in a subsequent suit.’”7 (City of
Oakland v. Oakland Police & Fire Retirement System (2014) 224 Cal.App.4th
210, 227–228.) This doctrine exists to “protect the integrity of courts by
fostering finality and minimizing the potential for conflicting judgments,
which serves to promote public confidence in the judicial process.” (Guerrero
v. Department of Corrections & Rehabilitation (2018) 28 Cal.App.5th 1091,
1099.)
The question we face here raises the same concerns addressed by
the claim preclusion doctrine. Allowing the Secretary to relitigate the merits
of the underlying causes of action undermines the judicial goals of fostering
finality and would create a significant possibility of inconsistent judgments.
Here, the Andalon judgment found the corporations liable for fraud. If the
Secretary prevailed on its statute of limitations argument, it would in effect
reverse the Andalon judgment by declaring the Andalon fraud claim invalid.

7 “A judgment by default is res judicata as to all issues aptly

pleaded in the complaint, and defendant is estopped from denying in a
subsequent action any allegations contained in the former complaint.” (Kahn
v. Kahn (1977) 68 Cal.App.3d 372, 382.) Judgments rendered by consent or
stipulation are also final judgments on the merits. (Victa v. Merle Norman
Cosmetics, Inc. (1993) 19 Cal.App.4th 454, 460–461.)

22
To clarify, we do not mean to suggest that claim preclusion
applies here. We only find the purpose of this doctrine informative in
interpreting the relevant statutory scheme.
F. Remaining Arguments
The Secretary contends section 2288, subdivision (b)(1), allows it
to relitigate the merits of the Andalon fraud claim. In particular, it points to
the portion of this subdivision stating that the Secretary “shall have recourse
to all appropriate means of defense and review, including examination of
witnesses and the right to relitigate any issues that are material and
relevant in the proceeding against the fund.” (§ 2288, subd. (b)(1).)
As explained above, section 2288, subdivision (b), creates a dual-
track system with different burdens of proof for proving a judgment arises
from fraudulent activity. Since Petitioners obtained a default judgment, the
relevant track is section 2288, subdivision (b)(2), and the Secretary cannot
rely on section 2288, subdivision (b)(1).
Further, even if the procedures authorized by section 2288,
subdivision (b)(1), were to apply here in some form, they do not authorize the
Secretary to raise any defense or issue. Rather, section 2288, subdivision
(b)(1), provides a limited right. It specifies that the Secretary can assert “all
appropriate means of defense and review.” (Italics added.) Likewise, it can
only relitigate issues “material and relevant in the proceeding against the
fund.” (§ 2288, subd. (b)(1), italics added.)
As discussed, the Secretary’s defenses are limited. The trial court
is instructed to order payment from the fund only if a claimant has a “valid
cause of action within the purview of Section 2282.” (§ 2288, subd. (a), italics
added.) Section 2287 likewise ties the court’s review of a petition to section
2282. Claimants are instructed to file petitions “based upon the grounds set

23
forth in the application to the Secretary.” (§ 2287, subd. (a), italics added.)
Claimants then have “the burden of proving compliance with the
requirements of Section 2282” and are “entitled to a de novo review of the
merits of the application as contained in the administrative record.” (§ 2287,
subd. (d), italics added.)
The above sections curtail the Secretary’s right to defense and
review under section 2288, subdivision (b)(1). To be appropriate, material,
and relevant to the proceeding against the fund, the Secretary’s arguments
must be within the scope of issues allowed under section 2282. (See § 2282.)
Nothing in section 2282 allows the Secretary to litigate the merits of the
underlying causes of action.
The Secretary’s argument also appears to assume that the right
to litigate the merits of the underlying causes of action must exist, or there
would be no need to call witnesses or relitigate issues. We disagree.
Witnesses and litigation may be required to determine whether a payment
claim complies with section 2282’s requirements.
Witnesses and litigation might be necessary determine whether a
final judgment was for “fraud, misrepresentation, or deceit, made with intent
to defraud” as required by section 2282, subdivision (a). Nothing in the
statutory scheme requires “that the complaint underlying the [final]
judgment contain a particular cause of action presented in a certain format.”
(Alves, supra, 111 Cal.App.5th at p. 113.) “[T]he Legislature contemplated the
Secretary would look beyond the causes of action as alleged in the civil
complaint to the underlying facts of the case where needed.” (Id. at p. 114.)
For example, a “breach of fiduciary duty can be based upon either negligence
or fraud depending on the circumstances.” (Ash v. North American Title Co.

24
(2014) 223 Cal.App.4th 1258, 1276.) Thus, witnesses could be called to assess
whether such an underlying cause of action involved fraud.8
Witnesses and further litigation could also be required to
determine the amount of damages the petitioners “were awarded for actual
loss and compensatory damages” (§ 2282, subd. (d)(3)), or whether the
judgment debtor truly lacks assets to pay the final judgment (§ 2282, subd.
(d)(4)).
III.
PAYMENT AMOUNTS
“[T]he liability of the [Fund] shall not exceed fifty thousand
dollars ($50,000) for any one claimant per single judgment finding fraud,
misrepresentation, or deceit, made with the intent to defraud.” (§ 2289, subd.
(a).) Here, the order does not list the amounts the Secretary is required to pay
each Petitioner from the fund. Instead, it “direct[s] payment out of [the fund]
in the amounts awarded in the [Andalon judgment] issued August 2, 2021.”
The Secretary asserts the trial court erred by failing to list the
specific sums payable from the fund to each Petitioner in the order. Due to
this omission, it claims the order is not sufficiently definite under Code of
Civil Procedure section 577.5, especially considering the $50,000 cap set forth
in section 2289, subdivision (a). While the Secretary has failed to show the

8 Promissory estoppel is another cause of action that may or may

not be based in fraud. A claim for promissory estoppel does not require a
misrepresentation. (Piccinini v. California Emergency Management Agency
(2014) 226 Cal.App.4th 685, 689.) But it can arise from a false promise. (See
Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 929–
930.)

25
order violates Code of Civil Procedure section 577.5, it violates section 2289,
subdivision (a).
Under Code of Civil Procedure section 577.5, “[i]n any judgment,
or execution upon such judgment, the amount shall be computed and stated
in dollars and cents, rejecting fractions.” The Secretary has not shown that
the order is a “judgment, or execution upon [a] judgment” within the meaning
of Code of Civil Procedure section 577.5. Nor does it cite any judgment in the
record. Rather, the Secretary assumes this statute applies without providing
any authority or analysis.
Even assuming Code of Civil Procedure section 577.5 applies to
the order, “a judgment possesses the requisite certainty . . . if the amount,
though not so expressed, is definitely ascertainable.” (In re Marriage of Sandy
(1980) 113 Cal.App.3d 724, 728, fn. 3.) The order meets this standard. It
directs the Secretary to make payments in the amounts set forth in the
Andalon judgment. Since the Andalon judgment lists the specific amounts
awarded to each Petitioner, the sum awarded to each Petitioner in the order
“is definitely ascertainable.” (Ibid.)
However, the Andalon judgment awarded several Petitioners
more than $50,000. The order does not contain any language limiting the
amount of these payments per section 2289, subdivision (a). Thus, it appears
to direct the Secretary to pay several Petitioners sums in excess of $50,000
from the fund, violating section 2289, subdivision (a).
Petitioners acknowledge the $50,000 limit in section 2289,
subdivision (a), and claim that none of them are seeking more than $50,000
from the fund. But this is not expressed in the order. As such, we reverse the
order to the extent it violates section 2289, subdivision (a). On remand, the
trial court shall enter a new order that complies with this statute.

26
DISPOSITION
The order is affirmed in part and reversed in part as directed. On
remand, the trial court shall enter a new order that complies with section
2289, subdivision (a). The parties shall bear their own costs on this appeal.

MOORE, J.

WE CONCUR:

MOTOIKE, ACTING P. J.

SCOTT, J.

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