Real Gucci bags for sale — cheap

Hye Young Yoo purchased seller Sue Jho’s business, P.K. Place, a retail store located in Cathedral City, for $400,000. The business did not yield the annual gross sales as represented by Jho, so Yoo sued Sue Jho. Got that? Yoo sued for breach of contract, fraud and rescission — to undo the transaction and get her money back.

Counterfeit Louis Vuitton and Gucci bags

Jho defended — claiming she told Yoo that approximately 30 percent of the sales receipts from the business came from counterfeit merchandise such as fake Louis Vuitton and Gucci bags. Think that is a legitimate defense?

Yoo’s real estate agent, Kwon, had also told Yoo the business thrived on counterfeit goods. The sale closed and Yoo kept up the tradition of selling counterfeit merchandise.

A couple of years after Yoo acquired P.K. Place, investigators came into the store and removed the counterfeit merchandise. (Now the investigator’s wives have Gucci purses.) Yoo shut down the business a few months after the raid and filed suit. Turns out seller Jho had pled guilty to selling counterfeit goods just before she sold the business. Jho had $400,000 in the bank. Yoo had a lawsuit.

Refund money

The trial court found that both parties knew they were dealing in counterfeit goods, so the judge tried to “split the baby.” She rescinded the sale and awarded the defunct business back to the seller, but ordered only part of the $400,000 paid back to the buyer Yoo. Surprisingly, to me anyway, seller Jho appealed.

Possession is nine-tenths of the law

The Court of Appeal overturned, citing the civil code that holds that if part of a contract is unlawful, the entire contract is void: “A party to an illegal contract can not come into a court of law and ask to have his illegal objects carried out.” Just as a contract to sell a corporation that produces marijuana paraphernalia is illegal and void, so is a contract to sell a business that includes counterfeit goods.

Neither party may resort to the courts concerning the business sale. Buyer Yoo is out $400,000. The public policy behind the Code is that parties are less likely to enter into illegal arrangements if they know they will receive no help from the courts should something go wrong. Enter into illegal contracts at your peril.

The lesson to be learned is that if you are entering into a contract that has some illegal elements, remember what we said as kids, “possession is 9/10 of the law.”

Also, try to “take the money and run.”

Knowingly buy counterfeit CDs: no legal recourse. Buy a car knowing it has stolen parts: out of luck. Buy bad prescription drugs on the black market — don’t look to the courts.

Golden rule

Remember the Golden Rule: She who has the gold rules.

Jim Porter is an attorney with Porter • Simon, with offices in Truckee, South Lake Tahoe and Reno. He is a mediator and was the Governor’s appointee to the Bipartisan McPherson Commission and the California Fair Political Practices Commission. He may be reached at porter@portersimon.com or at the firm’s web site www.portersimon.com.