Grassi Construction v. Bello CA1/2

BACKGROUND

A. The Parties Bello served as the sole shareholder, director, and president of Walldesign, a California corporation that installed drywall, acoustical material, and plaster for construction projects. Walldesign maintained a primary bank account at Comerica Bank. In 2002, Bello opened a different account in Walldesign’s name at Preferred Bank. This secondary account was funded with rebates and refunds Walldesign received from suppliers for unused products or materials. Bello apparently directed these suppliers to issue checks for rebates and refunds (instead of deducting the difference from Walldesign’s invoices), and then deposited the checks into the secondary account. Bello used the funds in this secondary Walldesign account to pay for various personal expenses, including expenses related to his family winery, horseracing stable, casino bills, and credit card charges. Bello paid nearly $8 million to roughly 130 individuals or entities from this account. (In re Walldesign, Inc. (2017) 872 F.3d 954, 960 (Walldesign, Inc.).) Grassi was one such entity. In 2006 and 2007, Bello issued three checks totaling $183,407.78 to Grassi for construction services related to…