Opinion
A160429
12-16-2021
SHIRLEY S. HWANG, Plaintiff and Respondent, v. FEDEX OFFICE AND PRINT SERVICES INC., et al., Defendants; EZRESOURCE, INC., et al., Appellants.
NOT TO BE PUBLISHED
(San Francisco City & County Super. Ct. No. CGC-11-512102)
Fujisaki, Acting P. J.
Plaintiff Shirley S. Hwang was the victim of a real estate fraud scheme perpetrated by defendant Jay C. Shah and several coconspirators. After Shah was convicted of multiple felonies in connection with the scheme, Hwang sued Shah in civil court and obtained a multimillion-dollar judgment against him. Hwang later prevailed on her postjudgment motion to (1) amend the judgment to add alter ego entities of Shah as judgment debtors, and (2) void certain real property transfers made by the alter ego entities to various transferees including Investment Property Management, LLC (IPM) (which later transferred the properties to EZResource, Inc. (EZ)).
On appeal, IPM, EZ, and EZ's chief executive officer Michael Flores (collectively appellants) contend the judgment is void because the trial court adjudicated an unpled claim under the Uniform Voidable Transactions Act (UVTA) (Civ. Code, § 3439 et seq.). After requesting and receiving supplemental briefing, we conclude the trial court acted within its inherent powers under Code of Civil Procedure section 187 to enforce an injunction issued in the criminal case under the so-called "Freeze and Seize" law (Pen. Code, § 186.11, subd. (f)(1)) that enjoined Shah and anyone acting in concert with him or at his direction from transferring the properties in question. We further conclude appellants were given sufficient notice and opportunity to be heard for purposes of due process. Accordingly, we affirm.
Further unspecified section references are to the Code of Civil Procedure.
Factual and Procedural Background
A detailed, factual recitation of the criminal prosecution of Shah is set out in the unpublished opinion in People v. Shah (July 8, 2016, A138475 [nonpub. opn.]). Briefly, Hwang was the victim of a real estate fraud scheme in which Shah and his coconspirators forged grant deeds on three condominiums in San Francisco that Hwang owned. Shah mortgaged the properties for more than $2.2 million, absconded with the loan proceeds, and laundered the money by transferring it to associates and affiliated corporate entities. (Ibid.)
During the criminal case, in November 2010, the trial court issued a preliminary injunction under Penal Code section 186.11 prohibiting Shah, his parents, his attorney of record, and "any of their representatives, agents, officers, and all other persons or entities acting in concert with them, for their benefit, or at their direction, or any other person with knowledge of this order" from transferring or otherwise disposing of or encumbering certain real properties (the criminal injunction). The list of affected properties included three properties located in Los Banos at 530 Adams Avenue, 317 Crescent Drive, and 732 Bluff Drive (collectively the Los Banos properties). The People filed a lis pendens on each of the properties identified in the criminal injunction.
The evidence adduced at the criminal trial showed that 530 Adams Avenue and 317 Crescent Drive were purchased using funds obtained in the real estate fraud scheme. (People v. Shah, supra, A138475.) Thereafter, 530 Adams Avenue was transferred from an entity named Martini & Chnoogle, Inc. (Martini & Chnoogle) to Shah, and then to an entity named M & K Properties, LLC (M & K), while 317 Crescent Drive was eventually transferred to an entity named Megan & Kasi Properties, LLC (Megan & Kasi). (Ibid.)
Although People v. Shah, supra, A138475 did not address 732 Bluff Drive, Hwang submitted evidence in the proceedings below that 732 Bluff Drive was acquired by Shah and his wife and transferred to M & K in 2009, and later to Megan & Kasi in January 2011.
In March 2013, Shah was convicted of conspiracy to commit money laundering; identity theft; grand theft; money laundering; burglary; and filing false deeds and deeds of trust. (People v. Shah, supra, A138475.) He was sentenced to 20 years in prison and ordered to pay a $14.1 million restitution fine. (Ibid.) Following Shah's conviction and sentence, the People moved to modify the sentence to include direct victim restitution for Hwang. (Commonwealth Land Title Insurance Company v. Shah (Aug. 31, 2021, A156674 [nonpub. opn.]).) In August 2015, the trial court ordered Shah to pay more than $300,000 in restitution to Hwang. (Ibid.)
His conviction was affirmed on appeal by Division Two of this court, with a modification to his sentence after the court struck the enhancements under Penal Code section 12022.6, subdivision (a)(2), on two money laundering counts. (People v. Shah, supra, A138475).
Meanwhile, Hwang filed a civil action against Shah for various tort claims, including trespass and slander of title. In or around September 2016, during the pendency of the civil action, Shah, as "manager" of Megan & Kasi, recorded grant deeds that transferred 732 Bluff Drive and 317 Crescent Drive to IPM. That same day, he recorded a grant deed as manager of M & K transferring 530 Adams Avenue to IPM. Then, in August 2017, on the first day of the civil trial, IPM transferred all three Los Banos properties to EZ. The grant deeds were signed by Shah and Flores as managers of IPM. The following week, Shah filed and served a declaration in the civil case claiming he was indigent.
Hwang's action was consolidated with a matter previously filed by Commonwealth Land Title Insurance Company (Super. Ct. S.F. City and County, case No. CGC-10-503332), which had insured the loans fraudulently obtained by Shah and his coconspirators.
Corporate records for IPM filed with the Secretary of State in 2016 listed Flores and Shah as the managers of IPM. Corporate records for EZ filed with the Secretary of State in 2017 identified Flores as the company's chief executive officer.
In September 2018, the trial court issued its statement of decision finding in favor of Hwang on her causes of action for trespass and slander of title against Shah and awarding her damages in excess of $3.8 million, including $1.6 million in punitive damages. In discussing Shah's net worth for purposes of punitive damages, the court found that "the network of entities that [Shah] developed in his criminal scheme to conceal and distribute the proceeds of his criminal enterprise in People v. [Shah] was still in use after his conviction, as evidenced by the movement of [Shah's] various Los Banos properties demonstrated by [Hwang] at the November 9, 2017 hearing. The historic and present movement of real property and funds between [Shah], his family members and associates and the failure to provide timely and relevant documents leads the court to suspect that the failure was meant to conceal . . . [Shah's] real net worth."
The trial court entered judgment in favor of Hwang in December 2018.
We affirmed the judgment in Commonwealth Land Title Insurance Company v. Shah, supra, A156674.
A. Orders for Third Party Examination of EZ
We hereby grant Hwang's request for judicial notice of the orders of examination, supporting declarations and exhibits, proofs of service, and minutes of related court proceedings.
In February 2019, Hwang applied to the trial court for an order of third party examination of EZ to "answer concerning property of the judgment debtor in [EZ's] possession or control[.]" In a supporting declaration, Hwang's counsel claimed that IPM, "an entity controlled by" Shah, granted EZ the Los Banos properties in violation of the criminal injunction. The declaration attached copies of the criminal restitution order, the criminal injunction, and the relevant grant deeds. The trial court granted the application and ordered EZ to appear.
Hwang obtained a second examination order in March 2019 after failing to timely serve EZ. (§ 708.120, subd. (b).) According to Hwang's counsel, Flores-the company's registered agent for service of process-had evaded multiple service attempts. On March 15, 2019, Hwang successfully served EZ with the order for third party examination and supporting documents, as well as a subpoena duces tecum. After EZ failed to appear on the examination date, the trial court continued the examination to May 7, 2019, and issued an order directing Flores-as EZ's registered agent-to appear on that date. Flores again failed to appear, and the trial court issued a civil bench warrant for his arrest.
B. Hwang's Motion to Amend the Judgment and Void Transfers
In August 2019, Hwang filed a postjudgment motion seeking to (1) amend the judgment to add Martini & Chnoogle, M & K, and Megan & Kasi (the alter ego entities) as additional judgment debtors; and (2) void the transfers of the Los Banos properties from the alter ego entities "to individuals and entities acting in concert with Mr. Shah, pursuant to the actual and constructive fraud prongs of the UVTA." In support, Hwang submitted numerous exhibits including the grant deeds transferring the Los Banos properties; the orders of third party examination served on EZ and supporting papers; the criminal injunction; and evidence that IPM was comanaged by Shah and Flores. Hwang concurrently applied for a temporary restraining order (TRO) preventing the Los Banos properties from being sold or transferred pending the motion.
The trial court (Judge Newton J. Lam) granted the TRO application and enjoined Shah and appellants, among others, as well as anyone acting in concert with them, from selling, transferring, assigning, pledging, granting or otherwise disposing of the Los Banos properties. The court also issued an order to show cause (OSC) requiring appellants to appear at the October 1, 2019, hearing on Hwang's postjudgment motion and "to give any legal reason why the relief requested in [Hwang's] Motion to Amend Judgment to Add Judgment Debtors should not be granted." The OSC advised appellants of their right to attend the hearing and oppose the motion, with or without counsel, and to file a written opposition by September 18, 2019. The OSC further advised that if appellants did not attend the hearing, "the court may make orders relating to the following real property, which is the subject of a temporary restraining order entered by this Court on August 16, 2019[.]" Appellants were served with the OSC, TRO, and Hwang's motion papers on September 3, 2019.
Appellants did not file a brief or submit evidence in opposition to Hwang's motion. On the day their written opposition was due, they filed a section 170.6 motion to disqualify Judge Lam, and an objection to the OSC consisting solely of an affidavit by appellants' counsel, Jason Estavillo; the affidavit stated that Flores "was unable to secure legal counsel until this week" and that Estavillo did "not have enough time to prepare for a hearing of this magnitude[.]"
At the October 1, 2019, hearing on Hwang's motion, Estavillo appeared for appellants and requested a continuance. He told the trial court that he had a "significant amount of evidence [he] need[ed] to go through that shows why . . . [Flores] acquired the properties. He was owed money." The court explained that the reason the OSC was issued was so that appellants could "establish whether [Flores] is a bona fide third-party purchaser." Estavillo responded, "But we didn't have time to-I don't understand how we could do that in one day." He further claimed to have "five binders in [his] office, and there's probably another 20 binders that [he needed] to go through[, ]" along with evidence that Flores had spent money improving the Los Banos properties. At the conclusion of the hearing, the trial court indicated it would grant Hwang's motion.
Here we observe that Estavillo made inconsistent statements about when he was retained by appellants, which was either on September 16, 2019, the "day before" the September 18th opposition deadline, or "September 7th."
On November 13, 2019, the trial court issued its written order denying the peremptory challenge, as well as a separate order granting Hwang's motion amending the judgment to add judgment debtors and voiding the transfers of the Los Banos properties (the November 13 order). The court found that the alter ego entities were created for the purpose of concealing stolen funds, and it amended the judgment to add them as additional judgment debtors.
The trial court additionally found that (1) the alter ego entities owned the Los Banos properties through the use of "ill-gotten mortgage funds," and (2) the transfers to appellants "at the direction of" Shah were not, in fact, protected transfers under Civil Code section 3439.08 of the UVTA; rather, they were "a continuation of [Shah's] efforts to place his 'assets' beyond his creditors." Citing Civil Code section 3439.07, subdivisions (a)(1) and (a)(3), "as well as the Court's inherent power to equitably enforce its judgments," the trial court declared "null and void" the alter ego entities' transfers of the Los Banos properties to IPM, as well as "any transfer, sale, or encumbrance occurring subsequent thereto[.]"
C. Hwang's Motion for Assignment of Rent Proceeds
Shortly after issuance of the November 13 order, Hwang moved for an order under section 708.510 assigning Shah's interests in rental payments generated from the Los Banos properties to her. On December 18, 2019, the trial court held a hearing on Hwang's motion. Appellants appeared through new counsel, Marc Eisenhart, who asked the court to reconsider its prior decision and vacate the November 13 order. After lengthy argument, the court declined to reconsider its prior ruling and continued the rent assignments matter pending supplemental briefing from Hwang.
Appellants' petition in this court for a writ of mandate/prohibition and stay of the December 18, 2019 hearing was summarily denied without prejudice to filing a nonstatutory motion to vacate the November 13 order.
D. Appellants' Nonstatutory Motion to Vacate
Meanwhile, appellants filed a nonstatutory motion to vacate the November 13 order (motion to vacate) on the grounds that they were denied due process when the trial court adjudicated an unpled UVTA claim against them.
In opposition, Hwang argued the motion should be denied because the Los Banos properties were transferred to appellants in violation of the criminal injunction, rendering those transfers void pursuant to People v. Pollard (2001) 90 Cal.App.4th 483, 491 (Pollard). She further argued that appellants were not entitled to relief because they came to the court with unclean hands, having disobeyed the criminal injunction and the orders for examination. Hwang further argued that appellants could not establish they were bona fide, good faith purchasers of the Los Banos properties.
On February 18, 2020, after a lengthy hearing on February 5, the trial court denied appellants' motion to vacate.
The parties also seek judicial notice of certain documents related to Hwang's request in her respondent's brief that we dismiss the appeal under the disentitlement doctrine and for appellants' lack of standing. Because Hwang's dismissal request does not comply with the mandatory requirements for motions on appeal (Cal. Rules of Court, rule 8.54; Halliburton Energy Services, Inc. v. Department of Transportation (2013) 220 Cal.App.4th 87, 106), we decline to rule on it and also deny the parties' related requests for judicial notice of records of the California Secretary of State regarding EZ's corporate standing. We further deny both parties' requests for judicial notice of various trial court records filed in the criminal and civil case against Shah that postdated the filing of the notice of appeal. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.) The parties have filed multiple requests for judicial notice, on which we deferred ruling. We now grant appellants' unopposed request for judicial notice of the March 18, 2020, emergency order issued by Chief Justice Tani G. Cantil-Sakauye, Chair of the Judicial Council of California, as well as the March 18, 2020, emergency order and April 9, 2020, implementation order issued by the administrative presiding justice of this court. These orders extending the time for acts required or permitted under the California Rules of Court are relevant to the timeliness of the instant appeal. (See Rowan v. Kirkpatrick (2020) 54 Cal.App.5th 289, 294-296.)
Discussion
A. Void Judgment
"A judgment is void on its face if the court which rendered the judgment lacked personal or subject matter jurisdiction or exceeded its jurisdiction in granting relief which the court had no power to grant." (County of Ventura v. Tillett (1982) 133 Cal.App.3d 105, 110 (Tillett).) The invalidity must be apparent upon an inspection of the "judgment roll" (Dill v. Berquist Construction Co. (1994) 24 Cal.App.4th 1426, 1441), which consists of "the pleadings, all orders striking out any pleading in whole or in part, a copy of the verdict of the jury, the statement of decision of the court, or finding of the referee, and a copy of any order made on demurrer, or relating to a change of parties, and a copy of the judgment . . . ." (§ 670, subd. (b)). A void judgment is subject to collateral attack by way of a motion to vacate or set aside the judgment. (Tillett, supra, 133 Cal.App.3d at p. 110.)
The issue of whether a judgment is void on its face is a question of law, which is reviewed de novo. (Ramos v. Homeward Residential, Inc. (2014) 223 Cal.App.4th 1434, 1440.) However, where the issues raised in opposition to the motion to vacate raise evidentiary matters beyond the judgment roll, our review is governed by the abuse of discretion standard, and we defer to factual determinations made by the trial court when the evidence is in conflict. (Id. at pp. 1440-1441.)
Appellants contend the judgment is void on its face (and alternatively on the full appellate record) because the trial court adjudicated an unpled UVTA claim. Emphasizing that Hwang never pleaded a UVTA claim and never made them party defendants, appellants complain the court ruled "beyond the issues litigated" (Van Houten v. Whitaker (1959) 169 Cal.App.2d 510, 518) by relying on various provisions of the UVTA to declare the subject property transfers null and void. Citing general statutory uses of the term "action" in the UVTA and elsewhere, appellants argue the remedial provisions of the UVTA can only be utilized against party defendants in a fraudulent conveyance lawsuit commenced by the filing of a UVTA complaint. (See Civ. Code, § 3439.07, subd. (a) [creditors' remedies "[i]n an action for relief . . . under this chapter"]; Code Civ. Proc., § 22 [defining "action"]; Code Civ. Proc., § 411.10 ["civil action" commenced by filing complaint]; and Nassif v. Municipal Court (1989) 214 Cal.App.3d 1294, 1298 ["action" is "synonymous with 'suit' "].) Hwang responds that the UVTA, as a remedial statute, must be construed broadly to further its purposes (Cortez v. Vogt (1997) 52 Cal.App.4th 917, 937), and thus, creditors' remedies under the UVTA should apply even in the absence of a separate, UVTA-styled complaint naming the transferees as defendants.
For this case, we are not prepared to endorse Hwang's broad contention that UVTA remedies may be applied in any postjudgment proceeding of a non-UVTA suit. Nevertheless, appellants fail to convince us that the trial court's decision to void the property transfers was erroneous or that it rendered the judgment void. That is, while the court largely relied on UVTA provisions in making its decision, the record reflects the court was also exercising its authority under section 187 and the Freeze and Seize law to enforce the criminal injunction.
1. The Trial Court's Authority to Enforce the Criminal Injunction
The trial court was keenly aware of the criminal injunction and Shah's apparent violation thereof, as evidenced by its comments throughout the proceedings below. At the hearing on the motion to vacate, the court observed, "[A] criminal injunction had issued in regards to these identified properties, all right, and then there were lis pendens filed by the D.A. on those properties[.] . . . I don't think it is resolved until it is taken off, and no one has told me that[.] . . . I'm just here to enforce the orders of this Court, including the criminal court, as to the orders that were issued . . . ."
Consistent with the foregoing remarks, the trial court's November 13 order indicates it was relying in part on its "inherent power to equitably enforce" the criminal injunction. And doing so was well within the court's authority. Pursuant to section 187, a trial court is empowered to adopt "all the means necessary" to enforce its judgments and orders, even if not specifically provided by statute. (§ 187; Phillips, Spallas & Angstadt, LLP v. Fotouhi (2011) 197 Cal.App.4th 1132, 1142-1143.) This is "a constitutionally conferred, inherent authority to 'create new forms of procedure' in the gaps left unaddressed by statutes and the rules of court." (People v. Lujan (2012) 211 Cal.App.4th 1499, 1502 (Lujan).) This power relates not only to the court's own process but to "situations in which the rights and powers of the parties have been established by substantive law or court order but workable means by which those rights may be enforced or powers implemented have not been granted by statute." (Topa Ins. Co. v. Fireman's Fund Ins. Companies (1995) 39 Cal.App.4th 1331, 1344; see Yolanda's, Inc. v. Kahl & Goveia Commercial Real Estate (2017) 11 Cal.App.5th 509, 514-515 [affirming court-fashioned procedure to allow judgment creditor to question third party about location of assets no longer in third party's possession].)
We review the decision of a trial court, not its reasoning. "A decision right in result will not be reversed because it is based on an erroneous theory." (Florio v. Lau (1998) 68 Cal.App.4th 637, 653 (Florio), citing D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19.) Here, as indicated, the court's November 13 order largely relied on sections of the UVTA to declare the property transfers void, including the creditor's remedies of Civil Code section 3439.07, subdivision (a), and the good faith transferee provisions of Civil Code section 3439.08. But even if the court's reliance on the UVTA was incorrect in theory, its application of the UVTA's provisions did not lead to an erroneous result. (Florio, supra, 68 Cal.App.4th at p. 653.)
The decision of Pollard, supra, 90 Cal.App.4th 483, which Hwang cited in the proceedings below, is instructive. In Pollard, the Court of Appeal relied on the Freeze and Seize law to uphold the voidance of a quitclaim deed on similar facts. There, the defendant (Pollard) had purchased real property with embezzled funds, and she quitclaimed that property to her bail bondsman (Clark) despite a TRO and preliminary injunction prohibiting her from transferring, disposing of, or encumbering any interest in the property. (Pollard, at p. 487.) Months later, after Pollard pled guilty to multiple white collar felonies and the trial court ordered the property sold, Clark recorded his quitclaim deed and attempted to obstruct the sale. (Id. at p. 488.) The trial court denied Clark's motion to expunge the lis pendens recorded by the People and granted the People's motions to void various instruments relating to the property including the quitclaim deed, finding that Clark was not a bona fide purchaser. (Ibid.) The Court of Appeal affirmed, concluding that "the quitclaim deed was void from the outset" and that Clark was not a bona fide purchaser of the property. (Id. at pp. 490-491.) Here, as in Pollard, the trial court expressly relied on a criminal injunction to support its order voiding the property transfers made by Shah and his alter egos after it found appellants were not bona fide purchasers of the Los Banos properties.
Moreover, the UVTA's good faith transferee provisions are analogous to provisions in the Freeze and Seize law. The UVTA provides that a transfer is not voidable "against a person that took in good faith and for a reasonably equivalent value" (Civ. Code, § 3439.08, subd. (a)), while the Freeze and Seize law provides that in cases involving sentence enhancements for aggravated white collar crime, the trial court may, upon petition by the People, preserve any asset or property transferred by the defendant to a third party subsequent to the commission of the white collar crime "other than in a bona fide purchase" to pay restitution and fines (Pen. Code, § 186.11, subd. (d)(1)). Under both laws, the "bona fide" or "good faith" nature of a property transfer is a relevant consideration for the trial court in determining whether to protect against the dissipation of property. Thus, the trial court's explicit finding that the three Los Banos transfers were not protected under the UVTA likewise supported the court's exercise of authority to enforce the criminal injunction.
Under the express language of Penal Code section 186.11, subdivision (d)(1), the "bona fide purchase" determination is to be made at the time the property is preserved by the trial court. That said, we see no reason why a further determination may not be made where the property is transferred after the issuance of a preliminary injunction. (See Pollard, supra, 90 Cal.App.4th at pp. 487, 489 [where property was quitclaimed after issuance of TRO and preliminary injunction, notice requirements were not violated, and trial court properly determined transferee was not bona fide purchaser on People's motion to void quitclaim deed].)
Appellants argue that Pollard provides no support for the trial court's decision because a so-called "Pollard motion" to enforce a criminal injunction under the Freeze and Seize law must be pendent to and brought by the prosecutor in the criminal proceeding and maintained solely to effectuate the criminal remedies. According to appellants, section 187 cannot be used to circumvent the express requirements under Penal Code section 186.11 that a Pollard motion be made by the prosecution in the criminal case.
The premise of these arguments-that Hwang made an impermissible "Pollard motion" in the civil action-is flawed. First of all, as Hwang points out, the term "Pollard motion" is found nowhere in the case law. Moreover, what appellants label a "Pollard motion" is simply the procedure under Penal Code section 186.11 for a prosecuting agency to obtain a preliminary injunction in white collar enhancement cases. (See Pen. Code, § 186.11, subd. (d)(2) ["prosecuting agency" may petition "with the criminal division of the superior court" to obtain injunction "necessary to preserve the property or assets" and proceeding "shall be pendent to the criminal proceeding and maintained solely to affect the criminal remedies provided for in this section"].) Those procedures were in fact followed in the criminal case and resulted in the issuance of the criminal injunction in 2010 freezing the Los Banos properties and other assets of Shah.
In Pollard, the People filed several unspecified motions to deal with the defendant's and bail bondsman's various efforts to thwart the sale of the enjoined property. There is no indication the motions were filed pursuant to Penal Code section 186.11, and the opinion only referred to the efforts as motions, or as a "culmination motion"-a shorthand label that simply reflected that it was the culmination of a series of motions filed by the People. (See Pollard, supra, 90 Cal.App.4th at p. 488.)
In seeking to have the Los Banos transfers voided, Hwang was not bringing an unauthorized "Pollard motion" in the civil court. Rather, she was attempting to return the properties to the status quo under a criminal injunction that was still in effect. Neither Pollard nor Penal Code section 186.11 specifies, let alone mandates, any particular procedure requiring a motion before the criminal court in the event an existing criminal injunction of this type is violated. Nor do appellants identify any authority suggesting that a prosecuting agency's failure to seek enforcement of a Penal Code section 186.11 injunction forecloses a civil court with jurisdiction over an enjoined party from acting to ensure preservation of the frozen properties. Hence, on this record, it was appropriate under section 187 for the trial court to fashion a procedure "in the gaps left unaddressed by statutes and the rules of court." (Lujan, supra, 211 Cal.App.4th at p. 1502.)
Critically, the trial court's enforcement of the criminal injunction was entirely consistent with the pending criminal proceedings under the Freeze and Seize law and did not conflict with Penal Code section 186.11, subdivision (d)(2)'s mandate that the proceedings instituted under that section be "maintained solely to affect the criminal remedies provided for in this section." Shah's liability for criminal victim restitution and restitution fines is massive and unquestionable, and there is nothing in the record that suggests he has paid all the restitution and fines ordered by the criminal court. By voiding the transfers of the Los Banos properties, the civil court's enforcement of the criminal injunction simply operated to maintain the court-ordered status quo (Shah's possession of the Los Banos properties) and did not in itself establish any rights or remedies belonging to Hwang.
Preservation of the frozen properties inured to the benefit of the public, which has a "significant" interest both in compensating victims of white collar crime and in recovering fines imposed against white collar criminals. (See Pen. Code, § 186.11, subds. (f)(3)(E) [in issuing preliminary injunction, court must give significant weight to "public interest in preserving the property" and "significant public interest involved in compensating the victims of white collar crime and paying court-imposed restitution and fines"], (h)(1) [court may levy upon enjoined property to pay fines and restitution to crime victims].)
Based on the foregoing, we conclude the trial court's citation and analysis of the UVTA provisions did not render the judgment void. After appropriately considering whether the transfers of the Los Banos properties were "bona fide" or in "good faith" and for reasonable value, the court acted well within its authority under section 187 and Pollard to declare the transfers void.
The mere fact that appellants were not expressly named as "parties" in Hwang's civil lawsuit does not support appellants' claim of a void judgment. (See, e.g., Pollard, supra, 90 Cal.App.4th at pp. 490-491].) Although a judgment may not be entered either for or against one who is not a party to an action or proceeding (Fazzi v. Peters (1968) 68 Cal.2d 590, 594), the trial court here did not enter judgment against appellants. Rather, the court added the alter ego entities as judgment debtors (a decision not challenged here) and then voided the property transfers by Shah and his alter egos under its authority to enforce the injunction. While this may have implicated EZ's purported rights in the Los Banos properties, it did not cause judgment to be unlawfully entered against appellants.
Appellants' authorities are distinguishable and do not compel a contrary result. Neither Kains v. Jones (1942) 53 Cal.App.2d 786 nor Diamond Heights Village Assn., Inc. v. Financial Freedom Senior Funding Corp. (2011) 196 Cal.App.4th 290 (Diamond Heights) involved the enforcement of an injunction prohibiting the transfer or encumbrance of real property. Moreover, in both cases, the nonparties were absent from the litigation when the decisions affecting their property rights or related interests were made. (Kains v. Jones, at pp. 788-789 [nonparty's property could not be encumbered "in his absence"]; Diamond Heights, at pp. 303-305 [reversing portion of judgment that voided mortgagee's deed of trust after mortgagee had prevailed on summary judgment and was no longer in case].) Here, it is simply not the case that the trial court voided the transfers of the Los Banos properties in appellants' absence. (See due process discussion at part B, post.)
Appellants' reliance on Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415 (Triplett) is likewise misplaced. Triplett, which also did not involve the enforcement of an injunction, held that section 187 did not permit the trial court to add the defendant's insurer as an additional defendant after a jury verdict where it was undisputed the insurer was not the defendant's alter ego. (Triplett, at pp. 1420-1421.) Again, the trial court here did not add appellants as additional defendants liable to Hwang.
2. The Criminal Injunction Remained in Effect
Emphasizing that the criminal injunction was a preliminary one, appellants challenge the November 13 order on the further ground that the injunction remained in force only until rendition of the criminal judgment and that it expired after Shah was sentenced in March 2013, years before Shah and the alter ego entities transferred the properties to IPM in October 2016. However, the criminal injunction expressly states it "shall remain in effect until further order of the Court." It is undisputed there has been no further court order terminating the criminal injunction. This decree did not, as appellants contend, impermissibly transmute the injunction into an unauthorized permanent injunction. Rather, the injunction's decree is reasonably interpreted as maintaining the status quo until the sentencing court has made a decision on whether or not to levy upon the properties.
Appellants next contend their position is bolstered by Penal Code section 186.11, subdivision (h), which provides that where real property has been preserved by the trial court and the facts underlying the white collar enhancement allegations are admitted or found to be true by the trier of fact, "the trial judge shall continue the preliminary injunction or [TRO] until the date of the criminal sentencing and shall make a finding at that time as to what portion, if any, of the property or assets subject to the preliminary injunction or [TRO] shall be levied upon to pay fines and restitution to victims of the crime . . . ." (Pen. Code, § 186.11, subd. (h)(1)(A).) In appellants' view, "once Shah was sentenced, the preliminary injunction dissolved as a matter of law." We are not persuaded.
Although appellants have not provided a record of the criminal sentencing proceedings, it appears the Los Banos properties were not levied upon at the time of Shah's sentencing in March 2013. But this does not suggest that the criminal injunction expired in March 2013 by operation of Penal Code section 186.11, subdivision (h)(1)(A). After all, the restitution proceedings-including the People's motion to modify the sentence to include victim restitution, the restitution hearing, and the issuance of the restitution order itself-did not occur until after the March 2013 sentencing proceedings. (See Commonwealth Land Title Insurance Company v. Shah, supra, A156674.) Moreover, trial courts generally retain continuing jurisdiction with respect to victim restitution (People v. Turrin (2009) 176 Cal.App.4th 1200, 1208), and the criminal injunction here, by its own terms, "remain[ed] in effect" since no further order terminating it had been issued.
A sentence is legally invalid if the court fails to address victim restitution. (People v. Waters (2015) 241 Cal.App.4th 822, 826; People v. Rowland (1997) 51 Cal.App.4th 1745, 1751.) However, when the economic losses of a victim cannot be ascertained at the time of sentencing, the court shall retain jurisdiction for purposes of imposing restitution until such time as the losses may be determined. (Pen. Code, § 1202.46.)
Integrated Lender Services, Inc. v. County of Los Angeles (2018) 22 Cal.App.5th 867 (Integrated Lender Services) does not assist appellants. There, the court held that the combination of a restitution petition, lis pendens, and two TROs identifying certain real property did not "add up to the property being 'seized'" for purposes of satisfying a restitution obligation because it appeared that none of the requirements for the white collar enhancement under Penal Code section 186.11, subdivision (h)(1)(A), had been satisfied. (Id. at p. 878.) Critically, there was "no evidence" in the appellate record that a white collar enhancement had been admitted or affirmed by a trier of fact; to the contrary, the abstract of judgment reflected that the defendant's sentence was not increased for the white collar enhancement. (Integrated Lender Services, supra, 22 Cal.App.5th at pp. 872, 876.)
Here in contrast, there is no dispute that the white collar enhancement allegation against Shah was affirmed. (People v. Shah, supra, A138475 [upholding white collar enhancement against Shah].) While there apparently were no orders by the trial courts below or in Integrated Lender Services to levy upon the identified properties, the lack of such order in Integrated Lender Services was "consistent with [the defendant] not having admitted the enhancement." (Integrated Lender Services, supra, 22 Cal.App.5th at p. 876.) No similar conclusion can be drawn here since the white collar enhancement allegation was found to be true, and the victim restitution proceedings did not occur until after the initial sentencing proceedings in March 2013. And unlike the instant situation, Integrated Lender Services did not involve an injunction that by its terms remained in effect until further order of the court.
Accordingly, we agree with the trial court that the criminal injunction was still in effect at the time Shah and the alter ego entities transferred the Los Banos properties. Moreover, the trial court's finding that Shah directed the transfers of the Los Banos properties from the alter ego entities to IPM, and from IPM to EZ, was sufficiently supported by the evidence that Shah executed all of the grant deeds in these transactions and was shown to be Flores's principal. Because these transfers were in violation of the criminal injunction, the trial court had the authority to declare them void. (§ 187; Pollard, supra, 90 Cal.App.4th at p. 491 [quitclaim deed in violation of TRO and preliminary injunction was "void from the outset"].)
In a related appeal in Hwang v. Shah (May 13, 2021, A160309 [nonpub. opn.]), which we judicially notice pursuant to Hwang's request, Division Four of this court found that Shah's father recorded a deed of trust encumbering property in Santa Clara County located at 4217 Quimby Road in October 2013 "in violation of the court's injunction." The Quimby Road property was identified in the same criminal injunction at issue here.
Specifically, Hwang submitted evidence in opposition to the motion to vacate establishing that Flores was an agent of and performed property management work for Shah and his father.
B. Due Process
Having concluded the judgment was not void, we turn to appellants' claim they were denied due process because they were never served with summons or given the opportunity to plead affirmative defenses; issue subpoenas; conduct discovery; test Hwang's unpled UVTA claim through pretrial motions; present percipient or expert witnesses and exhibits into evidence; "argue the cause;" object to evidence; or bring posttrial motions. While we agree that appellants were entitled to due process in the proceedings below since their rights and interests were at stake, we do not agree that they were entitled to the full panoply of litigation tools available to party defendants in a UVTA action. Contrary to appellants' contentions, the amount of notice and process they received was sufficient.
" '[D]ue process is a flexible concept, as the characteristic of elasticity is required in order to tailor the process to the particular need. [Citations.] Thus, not every situation requires a formal hearing accompanied by the full rights of confrontation and cross-examination. [Citation.] "What due process does require is notice reasonably calculated to apprise interested parties of the pendency of the action affecting their property interest and an opportunity to present their objections. [Citation.]' "Due process" is an elusive concept. Its exact boundaries are undefinable, and its content varies according to specific factual contexts.' [Citation.] The extent to which due process protections are available depends on a careful balancing of the interests at stake." '" (Gresher v. Anderson (2005) 127 Cal.App.4th 88, 106 (Gresher).)
In Pollard, supra, 90 Cal.App.4th 483, the court rejected a similar due process challenge by bail bondsman, Clark, who had received a quitclaim deed on property that was preserved under the Freeze and Seize Law. Pollard concluded the lis pendens furnished general notice to Clark regarding the proceedings against the property. (Id. at p. 492.) Additionally, Clark was given notice in late September 1999 of the People's motions to void instruments related to the preserved property and was able to file opposition papers, to appear with counsel and argue at the hearing in late October 1999, and to move to expunge the lis pendens. (Ibid.) Pollard further observed that "the short time frames for these two motions were necessitated by the pending sale of the property (scheduled to close escrow at the end of September 1999) and were prompted by Clark's shenanigans to thwart that sale." (Ibid.)
The record here is similar. Appellants were served in mid-March 2019 with the order of examination, supporting papers, and subpoena duces tecum seeking production of documents regarding EZ's ownership and control of the Los Banos properties. They were served on September 3, 2019-four weeks before the hearing on Hwang's motion-with the OSC, Hwang's moving papers, and the supporting declarations and exhibits identifying and addressing Hwang's contentions that (1) the Los Banos properties were transferred to IPM and EZ in violation of the criminal injunction and in order to place Shah's assets out of Hwang's reach, and (2) Shah did not receive reasonably equivalent value in return. Copies of the criminal injunction were submitted with the orders for examination of EZ and with Hwang's motion to amend the judgment. The OSC provided further notice of the court proceedings and advised appellants of their opportunity to file a written opposition and the consequences of their nonappearance. Taken together, these documents sufficiently apprised appellants of the pendency of the proceedings affecting their interests and to enable a meaningful response. (Gresher, supra, 127 Cal.App.4th at pp. 106, 109.)
Appellants were also given a reasonable opportunity to be heard. While the opposition period was abbreviated, it was not so minimal as to be tantamount to a denial of due process. (Cf. Urshan v. Musicians' Credit Union (2004) 120 Cal.App.4th 758, 765 [due process violation where each side has less than two days to prepare summary judgment motion or opposition].) Expediency was justified given Shah's prior history of attempting to conceal his assets in spite of the criminal injunction. Indeed, the trial court could reasonably view the timing of the transfers in question with suspicion, as they took place during the civil action, with the transfers from IPM to EZ occurring on the first day of the civil trial, followed shortly thereafter by Shah's declaration of indigency. (Pollard, supra, 90 Cal.App.4th at p. 492 [shortened notice period was necessitated by Clark's "shenanigans" to thwart court-ordered sale of property subject to preliminary injunction].)
Although Estavillo claimed he had insufficient time to prepare an opposition due to his late retention in the case, appellants cite no authority indicating their initial, unexplained delay in retaining counsel supports a due process challenge. And as indicated, appellants appeared through counsel at the October 2019 hearing on the OSC; the December 2019 hearing on Hwang's rental assignments motion (during which they were permitted to argue at length for reconsideration of the November 13 order); and the February 2020 hearing on appellants' motion to vacate. These were not rushed proceedings in which appellants were deprived of a meaningful opportunity to raise objections and assert their rights. The three hearings, held over the course of four months, comprised more than 170 pages of reporter's transcript. (See Pollard, supra, 90 Cal.App.4th at p. 492 [nonparty appeared and argued extensively during hearings covering 68 pages of reporter's transcript].) At no time did appellants submit any of their purportedly voluminous evidence regarding the bona fide nature of the transfer of the Los Banos properties. Even as late as the briefing on appellants' motion to vacate, Hwang argued in opposition that appellants were not bona fide purchasers, giving appellants an opportunity to submit responsive evidence. (See Golden Door Properties, LLC v. Superior Court (2020) 53 Cal.App.5th 733, 774 [permitting new reply evidence responsive to arguments made for first time in opposition].) On this record, we are satisfied that appellants had a reasonable opportunity to be heard.
C. Jurisdiction
Finally, we reject appellants' contention that the trial court acted in excess of its jurisdiction. The court had in rem and quasi in rem jurisdiction to declare the property transfers made in violation of the criminal injunction void. (Pollard, supra, 90 Cal.App.4th at p. 489.) Moreover, the OSC issued by the trial court was sufficient to bring appellants into the proceedings as parties of record and enable the court to make orders adverse to them. (Pacific States Savings & Loan Co. v. Mortimer (1945) 70 Cal.App.2d 811, 814.)
Appellants claim the trial court "substantially altered the Judgment by adding Appellants as 'third parties,' adjudicating unpled UVTA claims and defenses, and declaring the transfers of property to Appellants null and void." As discussed, we conclude the trial court's citations to the UVTA did not render the judgment void. We further disagree that the portion of the November 13 order voiding the property transfers altered the judgment. Though Hwang filed a single "Motion to Amend the Judgment," the name of the motion was not controlling (Powell v. County of Orange (2011) 197 Cal.App.4th 1573, 1577), and in substance, the portion requesting voidance of the property transfers did not attempt to add to or subtract from the civil judgment against Shah or make appellants liable to Hwang.
Appellants' authorities do not assist them. In Rochin v. Pat Johnson Manufacturing Co. (1998) 67 Cal.App.4th 1228, the amended judgment reinstated the jury's allocations of fault despite their having previously been stricken by the trial court. In Craven v. Crout (1985) 163 Cal.App.3d 779, the trial court changed the original judgment by making it payable over time rather than in a lump sum. There was nothing of the sort here. The only portion of the November 13 order amending the judgment was the addition of the alter ego entities as judgment debtors, a decision that is unchallenged here and, in any event, was not beyond the trial court's authority. (See Dow Jones Co., Inc. v. Avenel (1984) 151 Cal.App.3d 144, 148-149.)
Disposition
The judgment and order denying the motion to vacate the judgment are affirmed. Hwang is entitled to her costs on appeal.
WE CONCUR: Petrou, J., Chou, J. [*]
[*] Judge of the Superior Court of San Mateo County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.