Nguyen v. Pham et al

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MEMORANDUM DECISION
RE PHASE I OF TRIAL 	-1-
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
NGA TUY PHAM,
Debtor.
NGOC LAN THI NGUYEN,
Plaintiff,
vs.
NGA TUY PHAM, YEN CHUNG, KENNY HUNG
WAI NG, and QUAN THANH CHUNG,
Defendants.
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Case No. 08-30904 TEC
Chapter 7
Adv. Proc. No. 08-3073 TC
MEMORANDUM DECISION RE PHASE I OF TRIAL
The court bifurcated trial of the above-entitled action,
directing that Plaintiff’s claims against Yen Chung be tried in
Phase I, and that Plaintiff’s claims against Nga Tuy Pham be tried
in Phase II. 	Phase I was tried on May 26, 2009. 	Robin E. Foor
appeared for Plaintiff. 	John Chow and Roberto Ripamonte appeared
for Defendant Yen Chung. 	This memorandum decision shall constitute
the court’s findings of fact and conclusions of law.
Signed and Filed: June 04, 2009
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
June 08, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 08-03073 Doc# 62 Filed: 06/04/09 Entered: 06/08/09 15:01:56 Page 1 of 6

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MEMORANDUM DECISION
RE PHASE I OF TRIAL 	-2-
Plaintiff Ngoc Lan Nguyen (Plaintiff) was a close friend of
Defendant Nga Tuy Pham (Pham). 	Defendant Yen Chung (Chung) is
Pham’s married adult daughter. 	From about 2002 until August 2006,
Plaintiff made various loans to Pham that have not been fully
repaid. 	Plaintiff contends that Pham obtained these loans by
fraud, never intending to repay, and inducing Plaintiff to make the
loans by impersonating the spirit of Plaintiff’s dead brother and
in that guise urging Plaintiff to loan Pham money.
Among the transactions between Plaintiff and Pham is a
cashier’s check in the amount of $8,500 purchased by Plaintiff on
January 20, 2004, made payable to Chung, and delivered to Pham (the
Cashier’s Check). 	Pham testified that the Cashier’s Check
represents repayment of a loan she made to Plaintiff. 	Plaintiff
testified that the Cashier’s Check represents a loan she made to
Pham and Chung. 	The subject of Phase I is Plaintiff’s claim that
Chung is obligated to return the $8,500 transferred to her via the
Cashier’s Check under a theory of unjust enrichment or implied
contract.
I determine that Chung has no liability for receipt of the
Cashier’s Check.
To the extent transfer of the Cashier’s Check was a loan from
Plaintiff, it was a loan to Pham, to which Chung was not a party.
There were no discussions between Plaintiff and Chung regarding the
transfer. 	Chung made no promise to repay and never acknowledged
any debt, orally or in writing, directly or indirectly. 	Pham did
not act as an agent for Chung in obtaining the funds. 	Chung did
not ask Pham to obtain the funds. 	Chung and Pham did not agree
between themselves that Chung would repay either Pham or Plaintiff.
Case: 08-03073 Doc# 62 Filed: 06/04/09 Entered: 06/08/09 15:01:56 Page 2 of 6

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MEMORANDUM DECISION
RE PHASE I OF TRIAL 	-3-
Pham did not represent to Plaintiff that Chung would repay the
funds. 	Chung did not guarantee repayment.
There was no relationship or trust and confidence between
Plaintiff and Chung. 	To the extent there was a relationship of
trust between Plaintiff and Pham, that relationship did not change
the basic nature of the transaction described above: that any
obligation to Plaintiff created by the transfer of the Cashier’s
Check was in the nature of a loan to Pham, not to Chung.
To the extent there was any fraud in obtaining the Cashier’s
Check from Plaintiff, Chung did not participate in that fraud, and
had no knowledge of that fraud.
Chung did not have beneficial use the funds transferred via
the Cashier’s Check. 	Pham retained dominion and control of the
funds at all times. 	The Cashier’s Check was made payable to Chung
at the direction of Pham. 	Chung applied the funds as directed by
Pham, and not pursuant to her own wishes. 	On the same day she
received the Cashier’s Check, Chung made the following transfers at
the direction of Pham from the proceeds of the Cashier’s Check:
$1,500 in cash to Pham; $2,000 by check to Pham; and $3,000 by
check to Pham’s laundromat. 	One month later, Chung transferred the
remaining $2,000 to Tran Huynh at the direction of Pham. 	Pham used
the $2,000 check to Tran Huynh to buy jewelry for all her children
and grandchildren.
California courts follow the Restatement of Restitution in
resolving claims for unjust enrichment and implied contract.
Hirsch v. Bank of America, 107 Cal. App. 4th 708, 721-22 (2003).
The Restatement of Restitution provides in relevant part:
“Liability in restitution is based on and measured by the receipt
Case: 08-03073 Doc# 62 Filed: 06/04/09 Entered: 06/08/09 15:01:56 Page 3 of 6

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MEMORANDUM DECISION
RE PHASE I OF TRIAL 	-4-
of a benefit, but the receipt of a benefit does not of itself make
the recipient liable in restitution.” 	Restatement (Third) of
Restitution and Unjust Enrichment (Tentative Drafts) § 2(1). 	The
official comment to section 2 of the Restatement provides in
relevant part:
d. Benefit as the measure of liability. 	Liability in
restitution is based on the defendant’s receipt of a
benefit constituting unjust enrichment. 	See § 1, Comment
b. 	In the absence of a benefit to the defendant, there
can be no liability in restitution; nor can the measure
of liability in restitution exceed the measure of the
defendant’s enrichment. 	Restitution in a proper case may
strip a defendant of all profits gained in a transaction
with the plaintiff, but principles of unjust enrichment
will not support the imposition of a liability that
leaves an innocent defendant worse off, ignoring costs of
litigation, than if the transaction with the plaintiff
had never taken place. 	Such a result is permissible only
against a defendant whom the law treats as a conscious
wrongdoer. 	To the extent that liability exceeds benefit,
liability must be justified by reference to some source
of obligation other than the defendant’s enrichment at
the plaintiff’s expense.
Liability for unjust enrichment is measured by the benefit to
the transferee, not by the loss to the transferor. 	F.T.C. v.
Verity Int’l., Ltd., 443 F.3d 48, 67 (2d Cir. 2006). 	A party is
not liable in unjust enrichment for the receipt of property over
which that party does not exercise dominion and control. 	Zell &
Ettinger v. Berglas, 690 N.Y.S.2d 721 (Sup.Ct.App. 1999); Bugarsky
v. Marcantonio, 678 N.Y.S.2d 737 (Sup.Ct.App. 1998).
In the circumstances represented by the findings of fact
described above, Chung is not obligated under any theory of unjust
enrichment or implied contract to return all or any part of the
$8,500 Cashier’s Check. 	Chung had no contractual relationship with
Plaintiff. 	Chung engaged in no wrongdoing toward Plaintiff. 	Chung
received no economic benefit from receipt of the Cashier’s Check,
Case: 08-03073 Doc# 62 Filed: 06/04/09 Entered: 06/08/09 15:01:56 Page 4 of 6

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MEMORANDUM DECISION
RE PHASE I OF TRIAL 	-5-
because she had no discretion to put any part of those funds to her
own use.
**END OF MEMORANDUM DECISION**
Case: 08-03073 Doc# 62 Filed: 06/04/09 Entered: 06/08/09 15:01:56 Page 5 of 6

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Court Service List
Robin E. Foor, Esq.
Law Offices of Robin E. Foor
2843 Alhambra Drive
Belmont, CA 94002
John Chow, Esq.
Roberto Ripamonti, Esq.
Tsao-Wu, Chow & Yee, LLP
685 Market Street, Suite 460
San Francisco, CA 94105
Case: 08-03073 Doc# 62 Filed: 06/04/09 Entered: 06/08/09 15:01:56 Page 6 of 6