Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC330085, Mary Ann Murphy, Judge.
Law Offices of Mann & Zarpas and Lloyd S. Mann, for Defendant and Appellant.
Paul F. Moore II for Plaintiff and Respondent.
EPSTEIN, P. J.
In this breach of contract suit, plaintiff and respondent James Lizaso, acting as executor for the estate of Epifania Lizaso, alleged that defendant and appellant Manuel Lizaso failed to perform on a contract for the conveyance of real property from Epifania to Manuel made in 1990. The trial court determined that the contract underlying the dispute was illegal, cancelled Manuel’s deed to the property, and reconveyed the property to Epifania’s estate. Manuel appeals: among other arguments, he contends that the trial court’s determination of illegality was error.
For simplicity and clarity, we refer to family members by their first names.
We find that there was substantial evidence supporting the trial court’s finding. We need not and do not reach Manuel’s other arguments. The judgment is affirmed.
FACTUAL AND PROCEDURAL SUMMARY
“Following the usual rules on appeal after a trial on the merits, we construe the facts, including all conflicting facts, in the light most favorable to the verdict.” (Monroy v. City of Los Angeles (2008) 164 Cal.App.4th 248, 252, fn. 1.)
In 1977, Epifania bought residential real property consisting of several apartment units where she lived until her death in 2005. In 1990, Epifania developed serious health problems requiring open heart surgery. Her health insurance had lapsed for nonpayment of premiums. After the surgery, Epifania’s attorney Leo Shapiro, now deceased, arranged a conveyance of the property to Epifania’s sons Manuel and James. Under the terms of the agreement, Epifania would transfer the property to Manuel and James, who were to pay an installment note and make monthly mortgage payments. Epifania had the right to cancel the agreement by declaring forfeiture, Manuel and James were to sign quitclaim deeds transferring the property back to the Epifania, which she would hold in the event of a default. When James received the transfer documents, he refused to sign them because he believed the transfer was a fraud designed to allow Epifania to receive Medicaid. Manuel signed the agreement and a promissory note; title to the property was transferred to him by grant deed. Although a letter from Shapiro stated that he was In receipt of a quitclaim deed signed by Manuel transferring the property back to Epifania, that document was never located and is not part of the record. Beginning in 1991, the Department of Human Services of the State of California (Department of Human Services) paid over $182,888 for Epifania’s medical expenses.
After the 1990 transfer, Epifania continued to collect rents from the property. Manuel did not pay the $85,000 note, nor make any mortgage payments. Some months after Epifania satisfied the mortgage in 2005, Manuel applied for a $309,253.02 loan against the property. Epifania declared forfeiture under the 1990 agreement, and filed this action seeking to compel the return of the property. Manuel’s loan application was not successful. Epifania died some months after the action was filed; James pursued it as the executor of her estate. After her death, the Department of Human Services filed a creditor’s claim in the probate of Epifania’s estate for the funds it had paid toward her medical expenses.
Epifania’s will named James as executor. It stated that if Manuel did not transfer the property to her estate within 60 days of her death, he would take nothing under it, and the entire estate would go to James.
Following trial, the court found the agreement was void as an illegal attempt to defraud the Department of Human Services. The court cancelled Manuel’s deed and reconveyed the property to Epifania’s estate. Manuel timely appeals.
DISCUSSION
Manuel argues that the trial court’s determination that the agreement was illegal was not supported by substantial evidence. He also argues that he did not have notice that the agreement’s legality was an issue in the case so that he could argue its legitimacy.
Civil Code section 1667 provides that:
“[A contract] is not lawful which is:
“1. Contrary to an express provision of law;
“2. Contrary to the policy of express law, though not expressly prohibited; or,
“3. Otherwise contrary to good morals.”
An agreement to defraud or otherwise injure a third person may be deemed an illegal contract; such a contract is void. (See Homami v. Iranzadi (1989) 211 Cal.App.3d 1104, 1110-1112; May v. Herron (1954) 127 Cal.App.2d 707, 711-712 [refusing to enforce real property contract designed to defraud government]; see also Lala v. Maiorana (1959) 166 Cal.App.2d 724.) “‘“[A] party to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out; nor can he set up a case in which he must necessarily disclose an illegal purpose as the groundwork of his claim.”’ [Citation.]” (Selten v. Hyon (2007) 152 Cal.App.4th 463, 473.)
In this case, the trial court found by a preponderance of the evidence that the agreement, note, and deeds were “illegal and void as being entered into for the purpose of obtaining Medi-Cal benefits by transferring assets to Manu[e]l Lizaso that were to be transferred back to Mrs. Lizaso with the quitclaim deed required by paragraph 6 of the Agreement, allowing Mrs. Lizaso [to retain] control of the property and the ability to dispose of it at her death.” Manuel challenges this finding. “When findings of fact are challenged on appeal, we are bound by the familiar and highly deferential substantial evidence standard of review. This standard calls for review of the entire record to determine whether there is any substantial evidence, contradicted or not contradicted, to support the findings below.” (People ex rel. Brown v. Tri-Union Seafoods, LLC (2009) 171 Cal.App.4th 1549, 1567.) Substantial evidence is evidence which is reasonable, credible, and of solid value. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.) Substantial evidence may consist of inferences which are a product of logic and reason that rest on the evidence. (Ibid.)
The record supports the trial court’s finding. James testified that Shapiro devised the conveyance in order to qualify Epifania for Medicaid. In deposition testimony Manuel’s attorney read into evidence, James said that when he asked Epifania why she wanted to transfer the property, she said: “‘“I just want to get the medicare insurance. Your brother don’t pay any money in this apartment building.”’” Moreover, Manuel’s actions as the putative owner of the property support the inference that the conveyance was illegitimate. Manuel’s lack of maintenance, care, or financial investment in the property was shown in his failure to make any payments toward the mortgage or installment note during the 15 years he held title to the property. While Manuel claimed that he made property tax payments in person with cash, the trial court did not credit his testimony. Despite Manuel’s contention that the trial court’s finding was not supported by a “scintilla of evidence,” our review discloses substantial evidence showing the conveyance of the property had an illegal purpose.
Manuel argues, without citation to authority, that the trial court abused its discretion by not notifying him that the conveyance’s illegality was at issue in the case. “[I]f the substance of the transaction is illegal, it matters not when or how the illegality is raised in the course of the lawsuit.” (Homami v. Iranzadi, supra, 211 Cal.App.3d at p. 1112.) Although illegality was not pled by Epifania’s estate, the purpose for the conveyance occupied a central role in the trial. Both parties mentioned Epifania’s lack of medical insurance as a motivation for the conveyance in opening argument. James testified to it. Manuel’s attorney asked Manuel about Epifania’s lack of medical insurance, and addressed the question of whether the conveyance qualified as fraud in closing argument. There was no error.
DISPOSITION
The judgment is affirmed. Respondent to have his costs on appeal.
We concur: MANELLA, J.SUZUKAWA, J.