a
CASE NO. D079309
IN THE CALIFORNIA COURT OF APPEAL
FOR THE FOURTH APPELLATE DISTRICT
DIVISION ONE
LEE P. JOHNSON,
Defendant and Appellant,
vs.
FRANKLYN DE MARCO,
Plaintiff and Respondent.
APPELLANT’S OPENING BRIEF
SUPERIOR COURT, COUNTY OF SAN DIEGO
Case Number 37-2019-00004556-CU-FR-CTL
THE HONORABLE JOHN S. MEYER
Lee Johnson
9089 Clairemont Mesa Blvd, Ste 206
San Diego, Ca 92123
Ph (619) 808-7388
Email: lee@careplus1.com
legal@careplus1.com
Appellant Lee Johnson, pro per
APP-008
TO BE FILED IN THE COURT OF APPEAL
COURT OF APPEAL CASE NUMBER:
FOURTH APPELLATE DISTRICT, DIVISION
COURT OF APPEAL
ATTORNEY OR PARTY WITHOUT ATTORNEY:
NAME:
ONE
D079309
STATE BAR NUMBER:
SUPERIOR COURT CASE NUMBER:
Lee Johnson
37-2019-00004556-C U-F R-CTL
FIRM NAME:
9089 Clairemont Mesa Blvd, Suite 206
STATE: CA
San Diego
FAX NO ..
TELEPHONE NO. (619) 808-7388
E-MAIL ADDRESS lee@careplus1.com; legal@careplus1.com
ATTORNEY FOR (name): Appellant in Pro Per
STREET ADDRESS
cITY
ZIP CODE
92123
APPELLANT/ Lee P. Johnson
PETITIONER:
FRANKLYN DE MARCO
RESPONDENT/
-REAL PARTY IN INTEREST:
...._
.
CERTIFICATE OF INTERESTED ENTITIES OR PERSONS
(Check one):
m
INITIAL CERTIFICATE
D
SUPPLEMENTAL CERTIFICATE
Notice: Please read rules 8.208 and 8.488 before completing this form. You may use this form for the initial
certificate in an appeal when you file your brief or a prebriefing motion, application, or opposition to such a
motion or application in the Court of Appeal, and when you file a petition for an extraordinary writ. You may
also use this form as a supplemental certificate when you learn of changed or additional information that must
be disclosed.
1. This form is being submitted on behalf of the following party (name): Lee Johnson
2. a.
b.
[KJ
There are no interested entities or persons that must be listed in this certificate under rule 8.208.
D
Interested entities or persons required to be listed under rule 8.208 are as follows:
Nature of interest
(Explain):
Full name of interested
entity or person
(1)
(2)
(3)
(4)
(5)
D
Continued on attachment 2.
The undersigned certifies that the above-listed persons or entities (corporations, partnerships, firms, or any other
association, but not including government entities or their agencies) have either (1) an ownership interest of 10 percent or
more in the party if it is an entity; or (2) a financial or other interest in the outcome of the proceeding that the justices
should consider in determining whether to disqualify themselves, as defined in rule 8.208(e)(2).
Date: August 16, 2021
Lee Johnson
(TYPE OR PRINT NAME)
►
Page 1 of 1
Form Approved for Optional Use
Judicial Council of California
APP-008 [Rev. January 1, 2017]
CERTIFICATE OF INTERESTED ENTITIES OR PERSONS
Cal. Rules of Court, rules 8.208, 8.488
MVw.courts.ca.gov
TABLE OF CONTENTS
TABLE OF AUTHORITIES ............................................................... iv
I. STATEMENT OF THE CASE ........................................................ 2
II. PROCEDURAL HISTORY............................................................. 2
III. STANDARD OF REVIEW ........................................................... 3
IV. STATEMENT OF FACTS ............................................................ 3
V. QUESTIONS PRESENTED .......................................................... 4
VI. ARGUMENT
5
A. PLAINTIFF’S FAILURE TO ALLEGE SPECIFIC FACTS REGARDING HIS
PURCHASE OF DOT VN SECURITIES IS FATAL TO THE FRAUD CLAIM ......... 5
B. THE REMEDIES AVAILABLE TO A DEFRAUDED STOCK PURCHASER
ARE RECISSION AND RESTITUTION, OR DAMAGES, NOT BOTH ................... 9
C.
PLAINTIFF DID NOT ALLEGE, OR PROVE ACTUAL ECONOMIC LOSS 10
D. THE ONLY DAMAGES REQUESTED, AND AWARDED, RELATED TO
DEMARCO’S PURCHASE OF DOT VN SECURITIES ............................................... 13
E. THE JUDGMENT WAS A WINDFALL THAT UNFAIRLY REWARDED
PLAINTIFF FOR HIS DECEPTIVE PLEADINGS AND FAILURE OF PROOF ... 15
VIII. .......CONCLUSION.................................................................. 17
CERTIFICATE OF WORD COUNT ................................................ 19
PROOF OF SERVICE....................................................................... 20
iii
TABLE OF AUTHORITIES
Cases
Committee on Children's Television, Inc. v. General Foods Corp.
(1983) 35 Cal.3d 197, 216................................................................. 5
Dura Pharmaceuticals vs. Broudo (2005) 544 U.S. 336, 343-44 ...... 13
Foster vs. Sexton (2021) 61 Cal.App.5th 998, 1019-20 ....................... 5
Kuhn vs. Department of General Services (1994) 22 Cal.App.4th
1627, 1633 ....................................................................................... 11
Tarmann vs. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153,
157 ..................................................................................................... 2
Viterbi vs. Wasserman (2011) 191 Cal.App.4th 927 ............................ 9
Von Saher v. Norton Simon Museum of Art at Pasadena (9th Cir.
3009) , 592 F. 3d 954, 960 .............................................................. 15
Wells v. Zenz (1927) 83 Cal. App. 137, 140-41 ................................. 16
Statutes
California Corporations Code § 25401 ............................................... 9
Code of Civil Procedure §473 ............................................................ 15
Corp. Code, § 25501............................................................................. 9
Rules
Cal. Rules of Court, Rule 8.204(C)(1) ............................................... 19
iv
APPELLANT’S OPENING BRIEF
INTRODUCTION
'It is bad for courts to allow and lawyers to use vague but artful
pleading of fraud simply to get a foot in the courtroom door.' Tarmann
vs. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157
I. STATEMENT OF THE CASE
This is an appeal from a default judgment against Dot VN, Inc.,
(“Dot VN”), Lee Johnson, and Thomas Johnson based on fraud in the
inducement in connection with two purchases of Dot VN registered
securities in 2010.
This was the second action Plaintiff filed against these same
defendants on the same two causes of action. The claim at issue, and
upon which the judgment was entirely based, was the Second Cause of
Action for Fraud and Deceit.
This appeal is based on Plaintiff’s purposeful omission of critical
facts his second complaint, and his failure to allege or prove actual
economic loss, which failures render the judgment invalid.
Appellant Lee Johnson requests that the court vacate the
judgment.
II. PROCEDURAL HISTORY
This action was commenced on January 24, 2019, when Plaintiff
filed this complaint (the “2019 Complaint”), the second time he sued
2
the same defendants.
Defaults were entered against defendants Dot VN and Lee
Johnson on March 29, 2019 (CT 00154)
Default was entered the remaining defendant, Thomas Johnson
on December 18, 2019 (CT 00171).
The default judgment (CT 00179) was entered on February 2,
2021 (CT 00177).
Appellant timely filed his notice of appeal on June 10, 2021 (CT
00181).
III. STANDARD OF REVIEW
On an appeal from a default judgment, the court may vacate a
judgment where "the damages awarded are unsupported by sufficient
evidence." Scognamillo vs. Herrick (2003) 106 Cal.App.4th 1139,
1150.
The court may also review the sufficiency of the complaint with
respect to the judgment rendered.
IV. STATEMENT OF FACTS
Dot VN provides domain registration services pursuant to a
contract with the Vietnam Internet Network Information Center
(“VNNIC”), the governmental agency responsible for managing the .vn
top-level domain. In 2003, Dot VN became the first (and for some time,
only) company authorized to market and register .vn domain names
from abroad (Complaint, ¶¶ 2, 8). In 2008, seeking financing, Dot VN
went through the process of registered shares with the SEC under
Section 12(g) of the Exchange Act. Until 2016, its shares were quoted
3
on OTC Link, had eight market makers and was eligible for piggyback
registration. As a reporting company, Dot VN regularly posted audited
financial and other reports via the SEC Edgar filing system, including
2009 and 2010 (RJN Exhibit 1). All such filings were, and remain,
accessible by the general public on the SEC website.
A developmental company, Dot VN’s SEC filings reflected that
it had operated at a loss, including the 10Q filed for the 3 months ending
January 31, 2012, which showed an operating loss of over $510,000
for that period alone (CT 00100).
Plaintiff filed this complaint on January 24, 2019, which alleged
very specific facts about the debentures, but was completely devoid of
any facts regarding the purchase of Dot VN stock in 2010 or allege that
Plaintiff was a shareholder.
The Judgment by Default was solely based on DeMarco’s
purchase of Dot VN stock, which was not alleged.
V. QUESTIONS PRESENTED
1. Was the Complaint, in omitting the factual basis of the fraud
T
claim, plead with the required specificity.
2. Did Plaintiff conceal essential facts on his fraud claim in
order to sidestep alleging the appropriate remedy?
3. Were damages sufficiently pled?
4. Were the damages supported by substantial evidence and
justified by the manner in which the complaint was pled?
4
VI. ARGUMENT
A. PLAINTIFF’S FAILURE TO ALLEGE SPECIFIC FACTS
REGARDING HIS PURCHASE OF DOT VN SECURITIES
IS FATAL TO THE FRAUD CLAIM
California is a fact pleading jurisdiction and requires pleading of
ultimate facts. (Doe vs. City of Los Angeles (2007) 42 Cal.4th 531, 551,
fn. 5.) This means that a plaintiff is ordinarily required only to set forth
the essential facts of his case with reasonable precision... Foster vs.
Sexton (2021) 61 Cal.App.5th 998, 1019-20.
Fraud claims, however,
are subject to a stricter pleading
standard. “The facts constituting each element of fraud must be alleged
with particularity; the claim cannot be saved by referring to the policy
favoring liberal construction of pleadings. Committee on Children's
Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197,
216.) Every element of the cause of action for fraud must be alleged in
the proper manner (i.e., factually and specifically), and the policy of
liberal construction of the pleadings . . . will not ordinarily be invoked
to sustain a pleading defective in any material respect." (3 Witkin, Cal.
Procedure (2d ed. 1971) Pleading, § 574). Committee on Children's
Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216
Claims Alleged in the 2019 Complaint:
Two causes of action were alleged. The first cause of action1
1
This cause of action was dismissed before entry of judgment.
5
was “Action on Amended Debenture,” a breach of contract claim based
on the $125,000 Amended Debenture and was well pled.
The second cause of action “Fraud and Deceit” was not
sufficiently pled, and failed to mention that DeMarco’s purchased Dot
VN stock. It did not allege any facts essential to the claim and did not
disclose 1) that DeMarco was a shareholder; 2) that DeMarco had made
two purchases of Dot VN’s registered shares in 2010; 3) whether or not
he still owned the stock; or 4) facts showing that DeMarco sustained
actual economic loss.
You cannot even --find the words “shares”, “shareholder”, “stock”
or “securities” in the complaint.
The complaint alleged only non-specific language, such as:
50. The Misrepresentations were made with the intent to,
among other things, induce Plaintiff to invest money in Dot VN, so
that Defendants could use said funds for their own use and benefit.
(CT 00015)
51. At the time of the Misrepresentations, Plaintiff was
ignorant of their falsity and could not, in the exercise of reasonable
diligence, have discovered such falsity. (CT 00015)
52. In reasonable reliance on the Misrepresentations,
Plaintiff invested at least $300,000 into Dot VN. (CT 00015)
53. Had Plaintiff known that the Misrepresentations were
false. Plaintiff would not have invested money into Dot VN. (CT
00015)
55. As a proximate result of Defendants' fraud, and the facts
alleged in this Complaint, Plaintiff suffered damages in an amount
to be determined at trial, but not less than $300,000, together with
interest thereon in an amount to be determined at trial. (CT 00016)
6
The complaint was drafted to conceal that DeMarco’s had
purchased Dot VN stock.
It is only fair to point out that the elephant in the room was totally
ignored.
Nowhere in the 2019 Complaint does plaintiff disclose that
he was a shareholder. Nowhere to be found are the words “shares,”
“shareholder”, “stock”, “securities” or securities fraud. Nowhere did
plaintiff alleged that he had purchased Dot VN stock, and DeMarco did
not allege a cause of action for securities fraud.
Even the prayer for relief seems entirely unrelated to the fraud
claim. Complaint, page 10. (CT 00016):
1. For general damages according to proof, but in an amount not
less than $300,000.
2. For special, incidental, consequential, punitive and exemplary
damages according to proof;
3.
For interest at the maximum rate allowed by law;
4.
For costs of attorneys' fees; and
5. For such other and further relief as the Court may deem just
and proper.
Nothing in the prayer seems to relate to a stock purchase, and
while general damages were requested, general damages are not
compensatory damages. Further, there is no request for prejudgment
interest, nor is a date alleged from which interest runs.
Remarkably, the first mention of Dot VN’s stock was in the
7
declaration DeMarco filed in his application for a default judgment.2
Appellant submits the wording of the complaint did not provide
fair notice of the basis of the fraud claim.
The failure to mention Dot VN stock is not pleading the essential
ultimate facts (Foster vs. Sexton, supra), but more importantly, is
woefully short of meeting the stricter requirements in pleading specific
facts for every element of a fraud claim (Committee on Children's
Television, supra.)
By any measure, under any test, the cause of action for Fraud and
Deceit simply cannot be characterized as “well pled” and does not meet
the level of specificity required in fraud actions.
Plaintiff cannot just deliberately omit specific facts about his
purchase of Dot VN stock, or allege economic loss or damages, if that
is basis for the judgment.
It is not the function of the court to supply missing allegations or
stretch the meaning of vague language, default judgment or not, and the
court should not strain to help the plaintiff under these circumstances.
This is fundamentally unfair from a notice perspective, but even
worse is the fact that it was most likely purposeful.3
The question is why, given that the complaint and declaration
contained specific facts about the debentures, which were completely
irrelevant to the judgment?
3
While DeMarco possibly did not wish to alert other stockholders, it
is more likely he simply did not want to return the shares if he could
get away with it.
2
8
B. THE REMEDIES AVAILABLE TO A DEFRAUDED STOCK
PURCHASER ARE RECISSION AND RESTITUTION, OR
DAMAGES, NOT BOTH
The reason the 2019 Complaint failed to allege anything about
DeMarco’s purchase of Dot VN securities may be found by comparing
the statutory remedies, to the damages awarded in the default judgment.
California provides statutory protection to stock purchasers.
California Corporations Code § 25401:
It is unlawful for any person to offer or sell a security in
this state, or to buy or offer to buy a security in this state,
by means of any written or oral communication that
includes an untrue statement of a material fact or omits
to state a material fact necessary to make the statements
made, in the light of the circumstances under which the
statements were made, not misleading.
The statutory remedies depend on whether or not that person still
owns the securities.
"Any person who violates Section 25401 shall be liable to the
person who purchases a security from him or sells a security to
him, who may sue either for rescission or for damages (if the
plaintiff or the defendant, as the case may be, no longer owns
the security). . . ." (Emphasis added). Viterbi vs. Wasserman
(2011) 191 Cal.App.4th 927, 937.
Under Corp. Code § 25501, if DeMarco still owns the Dot VN
securities, his remedy is rescission, which enables his to get a full
refund plus prejudgment interest. However, he has to return the
securities.
Upon rescission, a seller may recover the security, upon tender
of the consideration paid for the security plus interest at the
9
legal rate, less the amount of any income received by the
defendant on the security.
In this scenario, the plaintiff must give notice of rescission and
tender the shares, and, of course, allege a cause of action for rescission.
DeMarco failed to allege a cause of action for rescission, and
there is no evidence showing he gave notice of rescission, tendered, or
returned the shares.
On the other hand, if DeMarco sold his Dot VN shares, the
statutory remedy is damages, which are calculated as follows under §
25501:
Damages recoverable under this section by a purchaser shall be
an amount equal to the difference between (a) the price at
which the security was bought plus interest at the legal rate
from the date of purchase and (b) the value of the security at the
time it was disposed of by the plaintiff plus the amount of any
income received on the security by the plaintiff.
DeMarco’s complaint failed to allege any facts about purchasing
or owning Dot VN securities. Plaintiff also did not allege facts or
provide any evidence demonstrating he suffered a loss when he sold the
securities, much less how the loss was calculated.
C. PLAINTIFF DID NOT ALLEGE, OR PROVE ACTUAL
ECONOMIC LOSS
In challenging a default judgment on appeal, a party may assert
that there is insufficient evidence to support the damages awarded:
"`[T]he general rule that the sufficiency of the evidence tendered in a
default proceeding cannot be reviewed on an appeal from a default
judgment . . . is true as to matters for which no proof is required by
10
virtue of the admission by default of the allegations of the complaint.
[Citation.] However, as to damages which, despite default, require
proof[,] the general rule does not apply." (Emphasis added)
Scognamillo vs. Herrick (2003) 106 Cal.App.4th 1139, 1150
Damages awarded on a default judgment may be reversed not
only where the award is so excessive that it "shocks the conscience"
and is the result of "passion [or] prejudice," but also where "the
damages awarded are unsupported by sufficient evidence." (Ibid.)
However, substantial evidence is not “synonymous with ‘any’
evidence.” It must be reasonable . . ., credible, and of solid value. . . .’
[Citation.]” Kuhn vs. Department of General Services (1994) 22
Cal.App.4th 1627, 1633
In his declaration in support of application for default judgment
filed on December 15, 2020, plaintiff finally admits that the use of
vague and/or ambiguous
phrases such as “otherwise invest” and
“otherwise invested money”, which were used in both the 2013
Complaint and his 2019 complaint, meant two separate purchases of
DotVN stock in March and April 2010, long before either complaint
was filed.4
In the declaration filed on in 2010. He says this:
3. As stated in paragraph 10 of the Complaint, in the year
2010, in reasonable reliance on the Misrepresentations, I made a
series of investments into Dot VN—totaling at least $300,000.
Following are details of these investments:
a. On or about March 23, 2010, in reliance on the
Misrepresentations, I purchased 750,000 shares of Dot VN at a price
of $0.133 per share. I paid $100,000 for this transaction. Upon
payment I was issued a Dot VN Stock Certificate bearing number
4
While DotVN was a reporting company.
11
5757. A true and correct copy of Dot VN Stock Certificate Number
5757 is attached hereto as Exhibit 3.
b. On or about April 14, 2010, in reliance on the
Misrepresentations, I entered the Debenture. I paid an additional
$100,000 for this transaction. A true and correct copy of the
Debenture is attached hereto as Exhibit 1. 5
c. On or about May 26, 2010, in reliance on the
Misrepresentations, I purchased an additional 333,335 shares of Dot
VN at a price of $0.30 per share. I paid an additional $100,000 for
this transaction. Upon payment, I was issued a Dot VN Stock
Certificate bearing number 5762. A true and correct copy of Dot VN
Stock Certificate Number 5762 is attached hereto as Exhibit 4.
4. At the time I made these investments, I was ignorant of
the falsity of the Misrepresentations and could not, in the exercise
of reasonable diligence, have discovered such falsity.
5. Had I known that the Misrepresentations were false, I
would not have invested any money into Dot VN. (Emphasis added)
(CT 00073).
15. As set forth in the Complaint and above, as of May 26,
2010, I had invested a total of $300,000 into Dot VN in reasonable
reliance on Defendants' fraud. Of these invested funds, $100,000
went toward the Debenture (and, in tum, the Amended Debenture)
which is the subject of my First Cause Action. I am not claiming
any damages in my second cause of action with respect to this
$100,000. (Emphasis added) (CT 00076).
In that declaration, DeMarco offered no evidence on matters
essential to his fraud claim, such as: 1) who sold him the DotVN stock,
or if the transaction was brokered; 2) if he still has the stock; 3) whether
he disposed of the stock; 4) if he did, the details of the transaction, and
proof that he lost money; 5) if he was unable to sell his stock, why; or
This subparagraph 3 is irrelevant to the judgment, since the claim for
“Action on Amended Debenture” was dismissed, any DeMarco was not
claiming any damages based on the debentures.
5
12
6) facts proving that his shares were unmarketable, or worthless6.
There was no substantial evidence on any of this. The entirety
of Plaintiff’s proof of damages, boils down to this: “had I known the
truth, I wouldn’t have bought the stock.”
This is not substantial evidence. It is insufficient as a matter of
law. Dura Pharmaceuticals vs. Broudo (2005) 544 U.S. 336, 343-44.
D. THE ONLY DAMAGES REQUESTED, AND AWARDED,
RELATED TO DEMARCO’S PURCHASE OF DOT VN
SECURITIES
The default judgment was granted without a prove up hearing7
based upon the voluminous paperwork filed on October 21, 2020. 8
Plaintiff dismissed the claim “Action on Amended Debenture”, leaving
only claim for Fraud and Deceit.
The DeMarco declaration also clarifies that sole basis for the
judgment relates to his purchase of Dot VN stock. In paragraphs 14-16
(CT 00075-00076) Plaintiff confirms that he is not requesting any
damages that relate to the debentures, only his stock purchases:
14. Contemporaneously with this Declaration, I am filing a
Request for Dismissal dismissing my First Cause of Action without
prejudice.
15. As set forth in the Complaint and above, as of May 26,
2010, I had invested a total of $300,000 into Dot VN in reasonable
reliance on Defendants' fraud. Of these invested funds, $100,000
DeMarco’s declaration also did not state the date he discovered the
truth, which might have been significant for statute of limitations
purposes.
7
The court might have further inquired on the reason securities were
not mentioned in the complaint, for one thing.
8
The judgment itself indicated it was based on plaintiff’s written
declaration. (CT 00179)
6
13
went toward the Debenture (and, in turn, the Amended Debenture)
which is the subject to my First Cause of Action. I am not claiming
any damages in my second cause of action with respect to this
$100,000.
The heart of the testimonial evidence offered that was not lifted
from the complaint is contained in paragraphs 3a-c., 4, and 5. of the
DeMarco Declaration, (CT 00072-00073), quoted verbatim as follows:
“3. As stated in paragraph 10 of the Complaint, in the year
2010, in reasonable reliance on the Misrepresentations, I made a
series of investments into Dot VN—totaling at least $300,000.
Following are details of these investments:
a. On or about March 23, 2010, in reliance on the
Misrepresentations, I purchased 750,000 shares of Dot VN at a price
of $0.133 per share. I paid $100,000 for this transaction. Upon
payment I was issued a Dot VN Stock Certificate bearing number
5757. A true and correct copy of Dot VN Stock Certificate Number
5757 is attached hereto as Exhibit 3.
b. On or about April 14, 2010, in reliance on the
Misrepresentations, I entered the Debenture. I paid an additional
$100,000 for this transaction. A true and correct copy of the
Debenture is attached hereto as Exhibit 1.
c. On or about May 26, 2010, in reliance on the
Misrepresentations, I purchased an additional 333,335 shares of Dot
VN at a price of $0.30 per share. I paid an additional $100,000 for
this transaction. Upon payment, I was issued a Dot VN Stock
Certificate bearing number 5762. A true and correct copy of Dot VN
Stock Certificate Number 5762 is attached hereto as Exhibit 4.
4. At the time I made these investments, I was ignorant of
the falsity of the Misrepresentations and could not, in the exercise
of reasonable diligence, have discovered such falsity.
5. Had I known that the Misrepresentations were false, I
would not have invested any money into Dot VN.”
The judgment rested solely upon DeMarco’s purchases of Dot
VN stock, even though Plaintiff never used the words “stock,”
“securities” “shares” “purchase” “sale” or “sold” in the 2019
14
Complaint, allege a cause of action for securities fraud. (CT 00007)
The first time DeMarco even disclosed he purchased shares of
Dot VN’s stock was in the declaration he filed to obtain the judgment,
which was more than 18 months after the default of appellant was
entered (CT 00154).9
DeMarco’s declaration (¶3) states only that he made a series of
“investments” into Dot VN in “reasonable reliance” on the collective
“Misrepresentations” (CT 00073), and was ignorant of their falsity and
could not, in the exercise of reasonable diligence have discovered their
falsity (¶4, CT00073). This conclusory language flies in the face of the
wealth of financial information available to the public before, and after
he purchased registered shares of Dot VN. (RJN, Exhibit 1). 10
E. THE JUDGMENT WAS A WINDFALL THAT UNFAIRLY
REWARDED PLAINTIFF FOR HIS DECEPTIVE
PLEADINGS AND FAILURE OF PROOF
This was deceptive pleading. By omitting the fact that a stock
purchase was actually the “investment,” DeMarco sidestepped
choosing the appropriate remedy, and fashioned his own hybrid, the
best of both worlds.
Plaintiff got away with keeping his stock, getting a full refund, 9
years’ worth of prejudgment interest, without proving consequential
damages.
This is no different than buying a house, claiming fraud,
Which was well beyond the time permitted to seek relief from
default under Code of Civil Procedure § 473.
10
SEC filings are judicially noticeable to show what was available to
the market. Von Saher v. Norton Simon Museum of Art at Pasadena (9th
Cir. 3009) , 592 F. 3d 954, 960
9
15
getting all your money back with interest (at a rate much higher than
any bank would pay you), and better yet, you still own the house. You
do not even have to move out.
What plaintiff succeeded in doing, through clever pleading,
hardly unintentional.
Fraud is a generic term which embraces all the multifarious
means which human ingenuity can devise and are resorted to by one
individual to get an advantage over another. The statutes of California
expressly provide that the suppression of a fact by one who gives
information of other facts likely to mislead for want of communication
of the fact concealed is deceit (Civ. Code, sec. 1710), and any other act
fitted to deceive is actual fraud. (Civ. Code, sec. 1572). Wells v. Zenz
(1927) 83 Cal. App. 137, 140-41.
In Wells, the plaintiff withheld facts in an affidavit used to obtain
an ex parte adoption order11. The court concluded that a party practiced
a fraud upon the court, and quoted the Dunlap vs. Stecre, 92 Cal. 344
as follows:
"An affidavit of this character is always ex parte.
The absent defendant is not present to impeach it, and if it
is sufficient in form, the court cannot disregard it, but is
compelled to accept its statements as true and make the
order which is demanded.....a plaintiff ....must exercise
good faith in his representations to the court or judge. He
must at least believe that the affidavit which he presents is
true. The presentation of a willfully false affidavit for the
purpose of obtaining an order for service of the summons
for publication is in itself an act of fraud ."
DeMarco withheld facts in a declaration used to obtain a default
judgment, which by its very nature is also ex parte.
11
16
What happened in this case is no different. After the defaults
were entered, the application for the default judgment was an ex parte
proceeding, and there was no opportunity to alert the trial court that
deception was being practiced upon it, that facts central to DeMarco’s
right to recovery had been purposefully omitted from both the
complaint, and the declaration used to secure an improper judgment
unsupported by the evidence, or, in this case, the lack of evidence.
VIII. CONCLUSION
There is a fine line between clever and deceptive. By burying the
trial court with paperwork, much of which was extraneous to the
judgment, it is possible the court simply did not notice that DeMarco
was being fast and loose with his pleadings and proof12.
The 2019 Complaint failed to disclose anything about the
purchase of Dot VN securities, much less if he still owned them. Even
in the declaration filed to obtain his judgment, Plaintiff does not state
whether or not he still owns the Dot VN stock.
Since DeMarco did not tell us, in his complaint or default
declaration, whether or not he sold his shares, we can only speculate.
Damages cannot be awarded based on speculation.
But, curiously, lacking only as to the claim involving DeMarco’s
purchase of Dot VN securities. As to the debentures, the factual
allegations were extremely specific, and if anything, excessively so.
There can be no good explanation for this, the shares were purchased
nine years before the complaint was filed. Not a mistake.
12
17
The complaint was deficient because it did not allege specific
facts about DeMarco’s purchase of Dot VN stock, the sole basis for the
damages awarded. Further, no substantial evidence was submitted to
support the damages awarded.
The judgment was a windfall and should be vacated in its
entirety.
Dated: December 18, 2021
Respectfully submitted,
Lee Johnson
Appellant in Pro Per
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CERTIFICATE OF WORD COUNT
Pursuant to Cal. Rules of Court, Rule 8.204(C)(1), I certify that
this brief substantially meets the requirements of the California Rules
of Court regarding its length, including the size of the font and the word
count. This brief contains 4560 words , including tables and this
Certification, as computed by Microsoft Word, which was used to
prepare this brief.
Dated: December 18, 2021
Lee Johnson
Appellant in Pro Per
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APP-009E
PROOF OF ELECTRONIC SERVICE (Court of Appeal)
Notice: This form may be used to provide proof that a document has been
served in a proceeding in the Court of Appeal. Please read Information
Sheet for Proof of Service (Court of Appeal) (form APP-009-INFO) before
completing this form.
Case Name: DeMarco v Johnson
Court of Appeal Case Number: 0079309
Superior Court Case Number: 37-2019-00004556-CU-FR-CTL
At the time of service I was at least 18 years of age.
a. My [ ] residence [X] business
address is (specify)
9089 Clairemont Mesa Bl, #206
San Diego, California 92123
b . My electronic service address is (specify): legal@hi-tek.com
I electronically served the following documents (exact titles):
Appellant’s Opening Brief
I electronically served the documents listed in 3. as follows:
Name of person served: Levi Silver
On behalf of (name or names of parties represented, if person served is an
attorney):
Franklyn De Marco
Electronic service address of person served: lsilver@swsslaw.com
On (date) : December 18, 2021
[X] The documents listed in 3. were served electronically on the persons and
in the manner described in an attachment (write "APP-009E, Item 4"
at the top of the page).
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
Date
December 18, 2021
Jon Hollmann
(TYPE OR PRINT NAME OF PERSON COMPLETING THIS FORM)
Form Approved for Optional Use
Judicial Council of California
APP--009 E (New January 1, 2017]
►
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PROOF OF ELECTRONIC
SERVICE
(Court of Appeal)
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