Opinion
A150540
02-28-2020
T.D. SERVICE COMPANY, Plaintiff, v. AREA FINANCIAL SERVICES, INC. 401(K) PLAN, Defendant and Appellant; MCLANE FOODSERVICE, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG15756616)
Area Financial Services, Inc. 401(k) Plan (401(k) Plan) appeals from a judgment in an interpleader action in which two junior lienholders on a commercial property in Hayward asserted competing claims to $297,791.32 in surplus funds following a foreclosure sale of the property. Following a four-day bench trial, the court issued a statement of decision in favor of McLane Foodservice, Inc. (McLane), followed by a judgment. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
T.D. Service Company (T.D.) filed a complaint in interpleader against the 401(k) Plan and McLane alleging that T.D. was the substituted trustee of a deed of trust on the Hayward property securing a debt of $649,000 and that T.D. had completed a trustee's sale of the property which resulted in a surplus of $299,391.32. T.D. alleged the 401(k) Plan claims all of the surplus pursuant to a deed of trust (DOT) recorded on December 21, 2012, and that McLane claims some or all of the surplus pursuant to its judgment lien recorded on January 27, 2014. T.D. deposited the surplus with the court and requested that it be discharged from liability and awarded costs and reasonable attorneys' fees. After the parties answered the complaint, the court dismissed T.D. and awarded it reasonable attorneys' fees and costs from the surplus funds. The amount remaining on deposit was $297,791.32.
On May 9, 2016, the 401(k) Plan filed an amended answer. The 401(k) Plan admitted that it was claiming all of the surplus proceeds pursuant to its DOT recorded on December 21, 2012. It alleged that on December 14, 2012, it loaned Deepak and Kiran Mehta (Mehtas) $265,000 under an installment note, which was secured by the DOT. The 401(k) Plan's answer attached an installment note under which the Mehtas agreed to pay to "Area Financial Services Inc, 401(k) Defined Benefit Plan" the principal sum of $265,000, plus interest. (All caps and boldface omitted.) The DOT identifies the beneficiary as "Area Financial Services Inc, 401(k) Defined Benefit Plan." (All caps and boldface omitted.) McLane's amended answer alleged, among other theories, that the 401(k) Plan was not entitled to the surplus funds because: (1) the DOT was void because the underlying loan lacked consideration; (2) the DOT transfer is a voidable transaction; and (3) the DOT is void because the 401(k) Plan had no legal existence at the time of the transfer and was incapable of taking title to the property.
In July and August 2016, the court held a four-day bench trial. During the bench trial, Harpreet Chaudhary, a CPA who works through his company Area Financial Services, Inc. (AFS), testified he established the 401(k) Plan in 2005 and a separate defined benefit pension plan (DBP Plan) in 2009. He testified that the entity listed on the installment note and the DOT is mistakenly identified as "Area Financial Services Inc, 401(k) Defined Benefit Plan." At the close of evidence, the 401(k) Plan made an oral motion for leave to amend its first amended answer to conform to the testimony to reform the installment note and the DOT based on the alleged original intent. The court denied the motion.
The 401(k) Plan was the party named below and is the only appellant. The 401(k) Plan's opening brief identifies Area Financial Services, Inc. Defined Benefit Pension Plan as "the 'Plan' " and argues that it was the intended grantee in the DOT. To minimize confusion, we refer to the appellant as the 401(k) Plan and the Area Financial Services, Inc. Defined Benefit Pension Plan as the DBP Plan. --------
The court found that Chaudhary failed "to correctly identify the pension plan in key recorded documents" and, therefore, the surplus funds should go to McLane. The statement of decision describes the competing claims of the lienholders and the court's reasoning as follows:
"The key issue for the court is that the pension plan seeking the funds is not named in key recorded documents. The entity that was purportedly granted an interest in the property that was sold at the foreclosure sale is named in the December 2012 note and deed of trust as 'Area Financial Services Inc, 401(k) Defined Benefit Plan.' But, the evidence shows that no such entity exists. Instead, Area Financial Services, Inc. has both a 401(k) Profit Sharing Plan and a Defined Benefit Pension Plan, but there is no '401(k) Defined Benefit Plan.' This uncertainty regarding the legal entity that purportedly received an interest in the foreclosed property is sufficient for the court to conclude that the surplus funds should go to McLane, not the pension plan. [¶] . . . [¶]
"The Junior Lienholders' Competing Claims.
"[T]his interpleader action stems from the November 17, 2014 foreclosure sale of 2497-2499 Industrial Parkway in
Hayward ('the Property'). Deepak Mehta and Kiran Mehta ('the Mehtas') were the owners of the Property. Harpreet Chaudhary ('Mr. Chaudhary') bought the Property at the foreclosure sale. Mr. Chaudhary is also the trustee of the pension plan. The proceeds from the foreclosure sale were used to satisfy Bay Commercial Bank's loan to the Mehtas. The question for the court to resolve is which of the junior lienholders is entitled to the surplus funds from the foreclosure sale.
"The pension plan's claim to entitlement to the surplus funds is based on a Deed of Trust ('DOT') dated December 14, 2012, which names the Mehtas as the trustors and the beneficiary is named as 'Area Financial Services Inc., 401(k) Defined Benefit Plan.' [Citation.] This DOT secures a promise by the Mehtas to pay 'Area Financial Services Inc., 401(k) Defined Benefit Plan' $265,000 with interest in monthly installments. [Citation.] Under this DOT, the pension plan contends the Mehtas transferred an interest in the Property to it and that its interest in or lien on the Property is senior to McLane's.
"McLane's interest in the surplus is based on a judgment McLane obtained against Mehta Enterprises, Inc., Deepak Enterprises, Inc. and the Mehtas in the Alameda Superior Court in the amount of $552,297.10, which judgment was recorded on April 20, 2015. [Citation.] McLane argues that it should get the surplus funds under its judgment lien because the Mehtas' transfer of an interest in the Property to the plan is invalid for lack of consideration, or is a voidable transfer, or that the pension plan lacks the legal capacity to obtain the surplus funds.
"The Pension Plan Is Not Entitled to the Surplus Funds Because the DOT Does Not Properly Identify the Pension Plan as the Beneficiary.
"The entity named in the installment note and DOT is 'Area Financial Services Inc., 401(k) Defined Benefit Plan.' [Citation.] But, there is no such entity. Instead, the evidence shows that the pension plan created by Mr. Chaudhary in 2009 was named 'Area Financial Services, Inc. Defined Benefit Pension Plan.' [Citation.] This plan was amended and restated in 2012. [Citation.] Indeed, the testimony of Rita Kalra shows that Area Financial Services, Inc. has both a 401(k) Profit Sharing Plan and a Defined Benefit Pension Plan. No entity
named 'Area Financial Services Inc., 401(k) Defined Benefit Plan' exists.
" 'An effective conveyance of an interest in real property must name and identify a definite and specific grantee who has the capacity to hold title. A deed that does not adequately identify the grantee is void, and the attempted conveyance of the property is ineffective.' (3 Miller & Starr, California Real Estate (4th ed. 2015) § 8:26.) However, 'mere ambiguity will not defeat the effectiveness of the conveyance if it can be cured by extrinsic evidence.' (Id., § 10:74.)
"Here, Mr. Chaudhary contends that the name of the entity on the installment note and DOT was a mere mistake and that he was confused at the time and thought that the Defined Benefit Pension Plan created in 2009 was a 'subset' of his company's 401(k) Profit Sharing Plan. The court does not find this contention credible. Shanti Thomas, the Escrow Officer at North American Title Company who prepared the installment note and DOT, testified that she prepared them in accordance with instructions from Mr. Chaudhary and Mr. Mehta. Mr. Chaudhary is a CPA with over 30 years of experience, a director of Bay Bank, and a sophisticated businessman. The court was impressed with Mr. Chaudhary's precision in his speech and testimony. He reviewed and approved the installment note and DOT. As part of the refinancing he arranged for the Mehtas, he received a 'fee' of $75,000. He is also the person who purchased the Property at the foreclosure sale and later resold it for a substantial profit. Under these circumstances, the court does not find it credible that the name of the non-existent entity on the note and the DOT was a mere mistake. The court will not speculate as to why Mr. Chaudhary allowed a purported conveyance to a non-existent entity. The extrinsic evidence is not sufficient for the court to conclude that the entity that should have been named in the DOT was the Area Financial Services, Inc. Defined Benefit Pension Plan.
"Because the attempted conveyance of an interest in the Property to an entity that does not exist was not effective, the court concludes that McLane, not the pension plan, is entitled to the surplus funds."
The trial court further found that McLane did not meet its burden of showing either that the DOT lacked consideration or that the conveyance was a fraudulent transfer. Finally, the court rejected the 401(k) Plan's equity argument, stating: "The pension plan argues that equitable considerations favor awarding it the surplus. The court does not accept this argument. Mr. Chaudhary as trustee of the Chaudhary Family Revocable Trust purchased the Property at the foreclosure sale for $975,000 even though the first deed of trust was approximately $673,000. He paid the money that created the surplus funds giving rise to this interpleader action. Indeed, he subsequently sold the same Property for $1,275,000, for a profit of $300,000, a profit equal to or greater than the amount at stake in this interpleader action. It appears to the court that Mr. Chaudhary was made whole in the transaction. Accordingly, the equities favor awarding the surplus funds of $297,791.32 to McLane the holder of a judgment in the amount of $552,297.10, not the pension plan created by Mr. Chaudhary, especially where Mr. Chaudhary failed to correctly name the pension plan in the installment note and DOT."
On February 1, 2017, the court entered judgment in favor of McLane, and the 401(k) Plan timely appealed.
DISCUSSION
The 401(k) Plan argues the trial court erred by: (1) failing to consider the extrinsic evidence offered by Chaudhary to explain the alleged misnomer of the beneficiary in the DOT and the parties' intent; (2) rejecting its equitable lien argument; and (3) denying its motion for leave to amend to conform to proof.
A. Consideration of Extrinsic Evidence
The 401(k) Plan asserts the standard of review is de novo because at issue is the interpretation of a written agreement where no conflicting evidence was admitted. The 401(k) Plan cites Leoke v. County of San Bernardino (1967) 249 Cal.App.2d 767 in support of its argument that uncontradicted extrinsic evidence does not make the interpretation of a written instrument a question of fact. But, Leoke also states "the interpretation of a written instrument, unless it turns upon the credibility of extrinsic evidence, is solely a judicial function." (Id. at p. 772.) Here, it is undisputed that the plain language of the DOT identifies the beneficiary as "Area Financial Services Inc, 401(k) Defined Benefit Plan," which is an entity that does not exist. (All caps and boldface omitted.) The 401(k) Plan relies upon extrinsic evidence offered by Chaudhary, whose credibility was assessed and rejected by the trial court. Accordingly, interpretation of the DOT involves factual determinations and the de novo standard of review does not apply. (See ibid.)
McLane argues that the trial court considered conflicting extrinsic evidence to resolve the alleged ambiguity in the naming of the grantee in the DOT and its decision must be upheld because it is supported by substantial evidence. Neither party correctly states the applicable standard of review. The trial court concluded "[t]he extrinsic evidence is not sufficient for the court to conclude that the entity that should have been named in the DOT was the Area Financial Services, Inc. Defined Benefit Pension Plan." " '[W]here the issue on appeal turns on a failure of proof at trial, the question for a reviewing court becomes whether the evidence compels a finding in favor of the appellant as a matter of law. [Citations.] Specifically, the question becomes whether the appellant's evidence was (1) "uncontradicted and unimpeached" and (2) "of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding." ' " (Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc. (2011) 196 Cal.App.4th 456, 466.)
"In general, in reviewing a judgment based upon a statement of decision following a bench trial, 'any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision. [Citations].' " (Estate of Young (2008) 160 Cal.App.4th 62, 75-76.) "Moreover, findings of fact are liberally construed to support the judgment." (Id. at p. 76.) The trier of fact is the exclusive judge of the credibility of the evidence. (Oldham v. Kizer (1991) 235 Cal.App.3d 1046, 1065.) Even uncontradicted testimony rejected by the trial court " 'cannot be credited on appeal unless, in view of the whole record, it is clear, positive, and of such a nature that it cannot rationally be disbelieved.' " (Adoption of Arthur M. (2007) 149 Cal.App.4th 704, 717.)
Applying these principles here, we affirm the trial court's finding that the extrinsic evidence offered by the 401(k) Plan was not sufficient to conclude that the intended grantee on the DOT was the DBP Plan. The parties agree that the DOT names an entity that does not exist. The 401(k) Plan argued below, as it does on appeal, that Chaudhary intended to name the DBP Plan in the DOT rather than the non-entity "Area Financial Services, Inc, 401(k) Defined Benefit Plan." The trial judge determined that Chaudhary's testimony that the name of the grantee on the DOT was a mistake was not credible. The statement of decision explains the basis for the court's credibility finding, which includes the facts that Chaudhary is a CPA with over 30 years' experience, a director at Bay Bank and a sophisticated businessman. The trial judge also credited the testimony of Shanti Thomas, the escrow officer at North American Title Company, who said she prepared the installment note and the DOT in accordance with instructions from Chaudhary and Mr. Mehta. In addition, the trial court found that Chaudhary purchased the property at the foreclosure sale and sold it for a substantial profit. It is the exclusive province of the trial judge to assess the credibility of witnesses' testimony and even if our court could reasonably make a different assessment of credibility—and there is no basis to do so on the record before us—this is not sufficient grounds for reversal. (See In re Ana C. (2012) 204 Cal.App.4th 1317, 1329 ["We may not substitute our assessment of the credibility of a witness in place of the credibility assessment of the trial court"].)
The statement of decision also finds that throughout the litigation the pension plan identified itself at various times as the 401(k) Plan, " 'Harpreet Chaudhary, trustee of the Area Financial Services, Inc. 401(k) Plan,' " " 'Harpreet Chaudhary, Trustee of the Area Financial Services, Inc. Defined Benefit Plan,' " and " 'Area Financial Service, Inc. Defined Benefit Plan.' " The interpleader complaint filed by T.D. alleges that the 401(k) Plan claimed a right to the surplus funds based on the DOT, and the 401(k) Plan—not the DBP Plan or any other entity—admitted this allegation in the 401(k) Plan's amended answer. Although the 401(k) Plan argued in the trial court, and argues on appeal, that the DBP Plan was the intended beneficiary of the DOT, nothing in the record shows that the DBP Plan was ever made a party to this action. The 401(k) Plan argues that T.D. erroneously sued " 'Area Financial Services, Inc. 401(k) Plan,' " and that this was beyond the 401(k) Plan's control. It further argues "[t]he fact that different iterations of Appellants name appear in the underlying pleadings are irrelevant and in no way, contradict Chaudhary's testimony concerning his long-held belief that his pension plan was a subset of his 401(k)-profit sharing plan." (Sic.) Based on the record, it is far from clear whether the 401(k) Plan was erroneously sued. McLane's amended answer attaches as an exhibit a claim made by the 401(k) Plan to the surplus funds. Further, the 401(k) Plan admitted it claimed a right to the funds. If the 401(k) Plan were erroneously sued, it had ample opportunity to correct this error and move to substitute the correct entity. (Code Civ. Proc., § 473, subd. (a)(1).) It failed to do so. The trial court was permitted to consider the conflicts identifying the party to the interpleader action in determining that the extrinsic evidence did not support a finding that the intended grantee on the DOT was the DBP Plan.
In addition to Chaudhary's testimony, which the court found not to be credible on the issue of the intended grantee in the DOT, the 401(k) Plan argues Mr. Mehta's testimony supports a finding that Mr. Mehta and Chaudhary intended to secure the $265,000 loan with the DOT, in order to protect the DBP Plan. However, Mr. Mehta's testimony does not clarify whether the 401(k) Plan or the DBP Plan was the intended beneficiary. He testified that he agreed to pay the "Area Financial Services, Inc., 401(K) Defined Benefit Plan" and he made monthly payments for approximately a year into a Wells Fargo account. Chaudhary testified Mr. Mehta made payments into Area Financial Services, Inc.'s 401(k) Plan Wells Fargo account, which Chaudhary also called "the plan account. I just refer to it as the 401(k). In my mind, it's the same thing. They're both retirement plans." Mr. Mehta's testimony sheds no light on the intended beneficiary of the DOT.
We conclude that the 401(k) Plan's evidence was not " ' "of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding" ' " that the DBP Plan was the intended grantee in the DOT. (Sonic Manufacturing Technologies, Inc. v. AAE Systems, Inc., supra, 196 Cal.App.4th at p. 466.)
Because the court determined the extrinsic evidence was insufficient to support a finding that the intended grantee of the DOT was the DBP Plan, it then determined the legal impact of a DOT which names a nonexistent entity. It concluded that " '[a]n effective conveyance of an interest in real property must name and identify a definite and specific grantee who has the capacity to hold title. A deed that does not adequately identify the grantee is void, and the attempted conveyance of the property is ineffective.' (3 Miller & Starr, California Real Estate (4th ed. 2015) § 8:26.)" Because the DOT names a nonexistent entity, the court found the conveyance was ineffective.
The trial court correctly applied California law. As our high court stated over a century ago: "The general rule is, beyond doubt, that a deed of conveyance is void unless the grantee named is capable of taking and holding the property named in the deed." (Rixford v. Zeigler (1907) 150 Cal. 435, 437.) An attempted conveyance of real property to a nonexistent entity is void. (Diocese of San Joaquin v. Gunner (2016) 246 Cal.App.4th 254, 273.) The 401(k) Plan cites Machado v. Southern Pacific Transportation Co. (1991) 233 Cal.App.3d 347 (Machado), for the proposition that "[t]he cardinal requirement in the construction of deeds and other contracts is that the intention of the parties as gathered from the four corners of the instrument must govern." But, here the four corners of the deed state the grantee is a non-entity, and the trial court did not find Chaudhary's testimony regarding his intent to be credible. The issue in Machado was whether a conveyance to a railroad was intended to be an easement or a fee simple, and there was no dispute over the identity of the grantee. (Id. at p. 350.)
Nor are we persuaded by the 401(k) Plan's citations to Sixth District etc. Assoc. v. Wright (1908) 154 Cal. 119 (Sixth District), Gelber v. Cappellar (1958) 161 Cal.App.2d 113 (Gelber) and County of Trinity v. Rourke (1969) 275 Cal.App.2d 628 (County of Trinity). The 401(k) Plan cites Sixth District for the proposition that "[a] misnomer in the grantor or grantee does not render a deed invalid." Sixth District involved deeds under which an agricultural association acquired property after the enactment of a state statute expressly providing for such associations to be able to purchase real property. (Sixth District, at pp. 127-128.) The court found that the misnomer of the grantee (" 'Agricultural District Number Six of the State of California' " rather than "Sixth District Agricultural Association") was not fatal because "[t]here can be no doubt upon the record before us that these conveyances were to the agricultural association for this district [Sixth District], and that any and all proceedings subsequently had by or on behalf of the association styled 'Agricultural District Number Six' . . . were had by or on behalf of the same association." (Id. at pp. 123-124, 127-128.) Unlike in Sixth District, where the evidence showed there was only a single organizational grantee, here Area Financial Services, Inc. had both the 401(k) Plan and the DBP Plan and the DOT identified a third entity that did not exist. The trial court noted the confusion during the litigation as to which entity claimed to be the grantee, and it found that the extrinsic evidence offered was insufficient to conclude the intended grantee was the DBP Plan.
In Gelber, the plaintiffs sought specific performance of a contract for sale of real property or damages for breach of contract. (Gelber, supra, 161 Cal.App.2d at p. 115.) The deed of trust the plaintiffs deposited into escrow listed the grantee as " 'Pacific Side Investment Corp, A California Corporation,' " and the deed of trust was executed by " 'Pacific Side Investments, Inc.' " (Id. at p. 121.) The defendants argued the plaintiffs had not specifically performed under the contract due to the discrepancy in the deed. (Ibid.) The evidence showed that the documents placed in escrow included a corporate seal with the name " 'Pacific Side Investments, Inc.' " The court found that based on this evidence, the misnomer in the deed could be corrected, and it did not invalidate the deed. (Ibid.) Here, nothing in the DOT indicates the intended grantee was the DBP Plan, the 401(k) Plan admitted it was the grantee, and the court found Chaudhary's testimony regarding an alleged misnomer not credible.
Nor does County of Trinity, supra, 275 Cal.App.2d 628 help the 401(k) Plan. There the court relied on prevailing case law adopting "the ameliorative theory that property ostensibly standing in the name of an unincorporated body is deemed to belong to its members jointly or as tenants in common." (Id. at pp. 629-630.) The court found that a deed to an unincorporated association vested ownership in the association's members and that when the association was later incorporated, the property became the property of the corporation. (Id. at pp. 630-631.) Unlike here, County of Trinity did not involve a deed issued to a nonexistent entity.
The 401(k) Plan argues that because there is evidence of the existence of the DBP Plan, "[t]he deed could have easily been corrected to either (1) the name of the [DBP] Plan to reflect the intent of the party's [sic], or (2) eliminate the added description of the Plan completely to read only Area Financial Services, Inc." The mere fact that the DBP Plan exists is not sufficient to establish that it was the intended grantee on the DOT. The 401(k) Plan's argument that the deed could be corrected to eliminate all references to either plan, and instead name only Area Financial Services, Inc. as the grantee, appears to be an argument first raised on appeal. (See Dietz v. Meisenheimer & Herron (2009) 177 Cal.App.4th 771, 800-801 [generally, a reviewing court will not consider an issue unless appellant demonstrates it was raised in court below].) Moreover, the 401(k) Plan points to no evidence that any party intended to name Area Financial Services, Inc. as the grantee. The 401(k) Plan's assertion of this new argument on appeal does not support reversal. Rather, it is a further indication of the ongoing conflict as to the intended grantee.
B. Equity Finding
The 401(k) Plan argues the trial court ignored the DBP Plan's equitable lien on the property and that the award of the surplus funds to McLane unjustly enriched McLane. McLane argues that the 401(k) Plan did not raise the issue of an equitable lien in its pleadings and may not assert this new theory on appeal. (Strasberg v. Odyssey Group, Inc. (1996) 51 Cal.App.4th 906, 920.) The 401(k) Plan responds that it properly pleaded "[t]he issue of an equitable interest" by asserting unjust enrichment as an affirmative defense in its amended answer. It further asserts that its closing trial brief, which the court ordered would be filed a month after the close of evidence in lieu of oral closing statements, argues for the imposition of an equitable lien. Even assuming the 401(k) Plan's amended answer and the argument in its closing brief sufficiently raised the equitable lien issue below, we find no abuse of discretion in denying equitable relief.
Where resolution of a conflict between parties "involves consideration of the equities of the case, we use the abuse of discretion standard of review . . . ." (Hartford Casualty Ins. Co. v. Travelers Indemnity Co. (2003) 110 Cal.App.4th 710, 724.) Under that standard, " '[d]iscretion is abused whenever, in its exercise, the court exceeds the bounds of reason, all of the circumstances before it being considered. The burden is on the party complaining to establish an abuse of discretion, and unless a clear case of abuse is shown and unless there has been a miscarriage of justice a reviewing court will not substitute its opinion and thereby divest the trial court of its discretionary power.' " (Denham v. Superior Court (1970) 2 Cal.3d 557, 566.)
We find no abuse of discretion here. The court considered the fact that Chaudhary, as trustee of the Chaudhary Family Revocable Trust, purchased the property at a foreclosure sale for $975,000 and then, less than three years later, resold the property for approximately $1,275,000. The court concluded that "[i]t appears . . . Chaudhary was made whole in the transaction" and therefore the equities favor McLane, which holds a judgment against the Mehtas of $552,297.10, "especially where Mr. Chaudhary failed to correctly name the pension plan in the installment note and DOT." The 401(k) Plan argues that the court's finding incorrectly assumes a profit of $300,000 and fails to consider Chaudhary's testimony regarding seller costs, seller carryback financing, and ownership costs. As discussed above, the court's credibility determinations regarding Chaudhary's testimony will not be disturbed on appeal. Based upon the record as a whole, including the credibility determinations made by the trial court, there was no abuse of discretion in denying the 401(k) Plan equitable relief.
C. Motion for Leave to Amend
Finally, the 401(k) Plan argues the court abused its discretion when it denied the 401(k) Plan's oral motion for leave to amend its first amended answer to conform to proof to reform the DOT. " 'Leave to amend a complaint is . . . entrusted to the sound discretion of the trial court. ". . . The exercise of that discretion will not be disturbed on appeal absent a clear showing of abuse. More importantly, the discretion to be exercised is that of the trial court, not that of the reviewing court. Thus, even if the reviewing court might have ruled otherwise in the first instance, the trial court's order will yet not be reversed unless, as a matter of law, it is not supported by the record." ' " (Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.)
Here, the 401(k) Plan did not move to amend its pleading until August 10, 2016, at the close of the four-day bench trial. McLane's amended answer, filed on May 9, 2016, raised the issue of the legal existence of the 401(k) Plan, and its trial brief, filed on July 19, 2016, specifically states "the entity designated on the Plan DOT is 'AREA FINANCIAL SERVICES INC, 401(K) DEFINED BENEFIT PLAN'. However, no such entity exists." McLane argued the DOT was void for failure to identify a definite and specific grantee. In denying the motion, the court stated "this is a huge issue in the Court's mind. . . . [¶] . . . Because the documents just seem to be all over the place as to what is the actual holder of the promissory note. [¶] So for you to ask me to amend the pleadings to reform that deed, that's denied"; and "the fact that there's been no effort whatsoever to get the promissory note right up to this point in time, it's an issue for the Court. It's a factual issue that I have problems with." The 401(k) Plan argues its motion was "based entirely on the evidence offered in trial concerning the incorrect identity of the grantee/beneficiary, in both the Note and Deed of Trust," but the evidence it cites is Chaudhary's testimony of a mistake. To the extent Chaudhary always intended for the DBP Plan to be the grantee, this information was always available to him, and he could have sought to correct the DOT much earlier than the close of evidence. The court did not abuse its discretion in denying the 401(k) Plan's motion for leave to amend.
DISPOSITION
The judgment is affirmed. McLane shall recover its costs on appeal.
/s/_________
Jackson, J. WE CONCUR: /s/_________
Siggins, P. J. /s/_________
Petrou, J.