Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC 304471, Luis A. Lavin, Judge.
Law Office of Nick A. Alden and Nick A. Alden for Plaintiff and Appellant.
Law Offices of Mark Waecker and Mark Waecker for Defendant and Respondent Arlester G. King.
Michael A. Cisneros, Attorney at Law and Michael Anthony Cisneros for Defendant and Respondent Judith Freeman.
Manning & Marder Kass, Ellrod, Ramirez, Daniel B. Herbert, Steven J. Renick and Lori B. Wade for Defendant and Respondent Donald Freeman.
ROTHSCHILD, J.
Norda Freeman appeals from a judgment entered against her after a three-day bench trial on her claims for quiet title and declaratory relief. We affirm.
Because this is an appeal from a judgment entered after a bench trial, our summary of the facts is drawn from the evidence introduced at trial.
Norda Freeman married Donald Freeman in 1984. During their marriage they acquired a parcel of real property on Minnesota Avenue (the Property) subject to a loan in the amount of $280,000, which was secured by a first deed of trust in favor of The Money Store. The Freemans operated a transportation business, Agape Transportation, Inc. (Agape), at the Property.
To avoid confusion, we will henceforth refer to all of the Freemans (Donald, Norda, and Donald’s mother Judith) by their first names. No disrespect is intended. (See In re Marriage of Smith (1990) 225 Cal.App.3d 469, 475-476, fn. 1.)
In March 1995, Norda filed a petition for dissolution of the marriage. In October 1995, Donald gave his mother, Judith, $120,000 of Agape’s funds. The court-appointed forensic accountant in Norda and Donald’s marital dissolution action was aware of the transaction, which was described as an “officer advance” in Agape’s general ledger, which was contained in the accountant’s draft report to the parties.
In May 2001, the superior court entered judgment of dissolution. The judgment awarded the Property and Agape to Donald and ordered Donald to pay Norda an equalizing amount of $315,774 plus interest, and secured the debt to Norda by the Property and Agape. Norda appealed, and the judgment was affirmed. (In re Marriage of Freeman (Oct. 31, 2003, B151496) [nonpub. opn.].)
On June 14, 2002, Donald entered into a written contract with Marcole Investments & Construction, Inc., a corporation owned and operated by Arlester King, to remodel the Property in order to convert it from solely commercial to combined residential/commercial use. The contract price for the work was approximately $58,000. Donald made an initial payment to Marcole of $9,000 but made no further payments.
On June 28, 2002, Donald filed a voluntary bankruptcy petition, but the petition was dismissed. Donald then filed a second bankruptcy petition in August 2002.
King completed the remodeling work on the Property in October or November 2002. After completing the work, he recorded a mechanic’s lien against the Property in January 2003. The lien expired three months later, and King took no further action on it.
The Property went into foreclosure on February 11, 2003. A trustee’s foreclosure sale was set for October 10, 2003.
Meanwhile, King continued to speak occasionally with Donald to try to obtain payment of the balance due on the remodeling contract. Donald also discussed with Judith the possibility of her helping him to pay King and save the Property from foreclosure. Judith testified that she had paid “approximately $113,000” of Donald’s attorney fees, which she characterized as a “loan” to Donald. Judith did not, however, have sufficient remaining funds to pay King and purchase the trust deed. Donald, Judith, and King eventually made the following arrangements: Judith would provide $267,000 to King to purchase the trust deed; whenever the Property was thereafter sold or refinanced, King would take the balance due him under the remodeling contract out of the proceeds from the trust deed, and he would then pay the remaining proceeds to Judith. Judith testified that the $267,000 she gave to King to purchase the trust deed came partly from her inheritance and salary but primarily from the sale of other real property in which she had invested.
Judith testified that beginning in 1995 she had invested in real estate both in her own name and in the name of a trust of which she was a beneficiary (and of which her daughter was a trustee).
Using the funds provided by Judith, King purchased the trust deed in June 2003. The assignment of the trust deed to King was recorded on July 16, 2003. After purchasing the trust deed, King referred the matter to his attorney and “ask[ed] him to handle it.”
In Donald’s bankruptcy proceeding, Norda sought to have Donald’s equalization debt to her declared nondischargeable. After a two-day trial on Norda’s claim, the bankruptcy court entered judgment on October 3, 2003, discharging the debt but requiring Donald to transfer the Property to Norda. On October 13, 2003, Donald quitclaimed “all of his interest in” the Property to Norda. In our opinion in a previous appeal in this matter, we noted that the parties had informed us that some time after Donald quitclaimed his interest in the Property to Norda, the trustee’s foreclosure sale of the Property did close. (Freeman v. King (May 3, 2007, B181091) [nonpub. opn.].)
One week after Donald quitclaimed his interest in the Property to Norda, Norda filed suit against King. She later amended her complaint to include several other defendants and to allege claims for (1) declaratory relief and cancellation of note, (2) quiet title, (3) conspiracy to defraud, (4) violation of Business and Professions Code section 17200, (5) negligence, and (6) intentional infliction of emotional distress. (Freeman v. King, supra, B181091.) After a series of demurrers and amended pleadings, the trial court ultimately sustained, without leave to amend, demurrers to all of Norda’s claims and entered judgment of dismissal.
Norda appealed, and we reversed in part. As we explained in our opinion, Norda’s theory of recovery was the following: King was a “straw man” who bought the trust deed for Donald and using Donald’s funds. King accordingly never really owned the trust deed. Rather, King merely purchased the trust deed on behalf of Donald, who thus became its real owner. Because Donald simultaneously owned both the Property and the trust deed, the loan against the Property was extinguished and the trust deed “merged” with the title to the Property. In effect, Donald had paid off the loan on the Property (by purchasing the trust deed through King) and consequently owned it free and clear. Therefore, after Donald quitclaimed the Property to Norda, she owned it free and clear. (Freeman v. King, supra, B181091.)
We concluded that “[t]he problem with Norda’s theory is that in effect it seeks to modify the judgment of the bankruptcy court. When the bankruptcy court ordered Donald to transfer all of his interest in the Property to Norda, the court thought it was awarding Norda a property that was subject to a loan of over $260,000, secured by [a trust deed] which the court thought was owned by someone other than Donald. Norda’s quiet title claim now seeks to extinguish that loan obligation. But if the bankruptcy court had thought that the Property was not subject to that loan obligation, or that Donald owned the [trust deed], the court might not have awarded Donald’s entire interest in the Property to Norda. [¶] In substance, what Norda is trying to do is recover the $267,000 which, she alleges, Donald somehow concealed from the bankruptcy court and gave to King to purchase the [trust deed]. Norda may or may not have a valid claim to some or all of that money-we express no opinion on the matter-but it is a claim she must pursue in bankruptcy court. If Norda is successful in Donald’s reopened bankruptcy case, the bankruptcy court can grant appropriate relief.” (Freeman v. King, supra, B181091, fn. omitted.)
Having concluded that Norda must seek relief in the bankruptcy court, however, we allowed that “[t]he bankruptcy court might... determine that some further proceedings should be conducted in the superior court, perhaps relating to enforcement.” (Freeman v. King, supra, B181091.) On that basis, we reversed the dismissal of Norda’s quiet title and declaratory relief claims against King and directed the trial court to grant Norda leave to amend to allege that the bankruptcy court had permitted further proceedings in the superior court, if the bankruptcy court did so. (Freeman v. King, supra, B181091.)
Norda did successfully move to reopen Donald’s bankruptcy case. On October 31, 2007, at a hearing in the reopened case, the bankruptcy judge stated as follows: “[W]hen I granted the motion to re-open the case, it was based on allegations made at that time that the debtor had been-had hidden some assets, and I wanted to give the Chapter 7 Trustee some opportunity to look into the accuracy of those claims and take whatever action he thought might be appropriate if there was some basis for the claim. That was a year and a half ago. The Trustee has not taken any action. I do notice from the docket the Trustee noticed some 2004 examinations of Mr. Freeman, and I think Mr. Freeman’s mother perhaps. I don’t-I don’t know if those 2004 examinations went forward or not. I didn’t hear anything, any discovery skirmishes so I assume they did, and not having heard anything from the Trustee, I am assuming that he did not come up with any evidence that the debtor in this now five-year-old case hid assets at the time that the bankruptcy was pending.... If [Norda’s] current motion is based on fraud that [Norda’s adversary proceeding] should be opened because the judgment was obtained on fraud because no one was telling the Court who held the lien, I think there was a one-year deadline to bring that motion. If this current motion is based on what is known as fraud on the Court, I don’t think there’s been enough evidence... that fraud on the Court has occurred.” The bankruptcy court also made various statements concerning Norda’s pending action in superior court, including the following: “If you can succeed in convincing the [s]tate [c]ourt that somehow [Donald] has an interest in the deed of trust, go for it.”
On November 21, 2007, Norda filed her fifth amended complaint in the superior court. She alleged that “[o]n October 31, 2007, the [b]ankruptcy [c]ourt granted [Norda] permission to pursue her claim in the [s]uperior [c]ourt, ” and that, on the basis of various documents from the bankruptcy proceedings, the superior court had “determined that the [b]ankruptcy [c]ourt granted [Norda] permission to proceed in the [s]uperior [c]ourt.” The fifth amended complaint alleged claims against King for quiet title and declaratory relief on the basis of the theory described in our previous opinion (which the fifth amended complaint quotes verbatim). At the same time, the fifth amended complaint alleged that King “has no standing in this lawsuit, ” apparently because he was a “straw man” who purchased the trust deed with funds from the “Freeman [f]amily.” Norda also amended her complaint to substitute Donald and Judith for two Doe defendants. King cross-complained against Donald, Judith, and the real estate investment trust in which Judith was involved.
The case proceeded to a three-day bench trial, after which the trial court entered a statement of decision rejecting all of Norda’s claims. The court found that King purchased the trust deed “using funds provided to him by Donald’s mother, Judith, ” and that “none of the funds obtained by King from Judith were from Donald.” “That is, King was not a ‘straw man’ who bought the [trust deed] for Donald and/or using Donald’s funds. Judith expected King to pay her back after he deducted the amount owed to him by Donald and after the [P]roperty was sold.... None of the proceeds of the sale of the Property were earmarked for or would go to Donald. Simply put, Donald did not provide King, either directly or indirectly, with any of the funds used by him to purchase the [trust deed], and there is no evidence to support any claim by Norda that King or Judith would funnel any of the proceeds from the sale of the Property to Donald.”
The court went on to state that “[b]oth Norda and King claim that they are the rightful owners [of] the entire proceeds” from the sale of the Property. “Donald claims no interest in the proceeds. As for Judith, it appears that King and Judith entered into a confidential agreement between them with regards to the distribution of any proceeds awarded to King. In return, the cross-complaint was dismissed.”
On November 4, 2008, the trial court entered judgment against Norda and in favor of King, Donald, and Judith on both causes of action, and the court awarded the proceeds from the sale of the Property to King. Norda filed her notice of appeal from the judgment on November 18, 2008. The trial court subsequently amended the judgment to include awards of attorney fees to Judith and King, and the court also entered a separate order awarding attorney fees to Donald on the basis of an attorney fees provision in the trust deed.
Norda’s unopposed request for judicial notice, filed January 15, 2010, is granted.
DISCUSSION
In her opening brief on appeal, Norda assails the judgment on multiple fronts. For the most part, her theory of recovery is the same one described in our previous opinion, except that she now claims that not only King but also Judith “was nothing more than a straw person” who acted on behalf of Donald and used his funds to purchase the trust deed.
As described in our previous opinion, Norda’s theory depends on the claim that when King purchased the trust deed, he used funds that (1) actually belonged to Donald and (2) Donald had concealed from the bankruptcy court. Given the trial court’s factual findings, which are supported by substantial evidence, Norda’s theory fails. The trial court found that “none of the funds obtained by King from Judith were from Donald.” That finding is supported by substantial evidence: Judith testified that the funds came from her inheritance, her salary, and her real estate investments, some of which were in her own name and some of which were in the name of a trust involving two other individuals, neither of whom was Donald. The record contains no evidence that the funds came from any other source. Moreover, the trial court concluded that “there is no evidence to support any claim by Norda that King or Judith would funnel any of the proceeds from the sale of the Property to Donald.” (Italics added.) That is, not only did the money to buy the trust deed come from Judith and not from Donald, but also after the Property was sold and the note paid off, the proceeds from the sale (less the money owed to King on the remodeling contract) would go to Judith and not to Donald. Thus, Donald never concealed assets from the bankruptcy court. On appeal, Norda does not cite any evidence showing that the funds came from a source other than Judith or refuting the court’s statement that there is no evidence that some of the proceeds would go to Donald.
The consequence of the trial court’s factual findings is that King was not a “straw man” who bought the trust deed with Donald’s money or money that was held by Judith on Donald’s behalf. Thus, the sole theory on which we, in our previous opinion, allowed Norda to proceed has now failed as a matter of fact.
Many of Norda’s arguments focus on the $120,000 of Agape funds that Donald gave to Judith in 1995, six years before the judgment in the marital dissolution action (2001) and seven years before Donald filed his bankruptcy petition (2002). That $120,000 payment to Judith cannot support Norda’s theory. Norda’s theory is based on funds that Donald allegedly concealed from the bankruptcy court, but Norda has made no showing that Donald hid any assets from the bankruptcy court. The superior court found as a matter of fact that the funds King used to purchase the trust deed were Judith’s, not Donald’s. On appeal, Norda fails to show that the superior court’s finding was not supported by substantial evidence. Without a showing that Donald hid assets from the bankruptcy court (which assets were later used to purchase the trust deed), Norda has presented no reason to modify the judgment of the bankruptcy court, which awarded Norda the Property subject to the trust deed.
Given the foregoing analysis, Norda’s arguments on appeal require little discussion. First, Norda raises the issue of “whether Judith acquired any interest in the [trust deed].” This is a reiteration of Norda’s claim that Judith was merely a “straw person” acting on behalf of Donald and with Donald’s money. For the reasons already given, we reject that claim.
Second, Norda raises the issue of whether Donald’s $120,000 payment to Judith and the “profits” Judith generated by investing those funds in real estate were “adjudicated” in the marital dissolution action. The argument fails at the threshold because at trial Norda did not attempt to litigate this issue and, on the contrary, expressly informed the court that she was not attempting to litigate it. Norda may not advance a new theory on appeal. (Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316.)
On a related point, Norda argues that the report of the court-appointed forensic accountant, showing disclosure of the $120,000 in the dissolution action, should have been excluded as hearsay and as a confidential settlement document. Assuming for the sake of argument that the trial court abused its discretion by admitting the document, the error was harmless because at trial Norda expressly declined to attack the dissolution judgment on the basis of the $120,000. Norda does not explain how the admission of the document could have prejudiced her on the theories she actually advanced at trial, and we conclude that it did not.
Third, Norda argues that the trial court should have entered judgment in her favor “based on the unclean hands doctrine.” The doctrine of unclean hands is a defense, not a theory of recovery, as the case cited by Norda confirms. (See Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 985 [the unclean hands doctrine “is an equitable rationale for refusing a plaintiff relief where principles of fairness dictate that the plaintiff should not recover”].) Norda is the only plaintiff in this case (and King dismissed his cross-complaint), so application of the doctrine of unclean hands could only work to her detriment, as a defense. But the trial court did not apply the doctrine, and neither do we.
In connection with this argument, Norda makes various accusations concerning “[d]efendants’ [c]ontinuous [c]onspiracy to [d]efraud Norda.” (Bold omitted.) For example, Norda’s brief states: “One might ask, if there was nothing to hide, why Donald and/or Judith did not purchase the [trust deed] directly [rather than giving the money to King and having him purchase it]?” (Bold omitted.) The answer that conforms to the trial court’s findings of fact and the substantial evidence supporting them is this: Judith was trying to help Donald with two problems. One was to save the Property from foreclosure. The other was to pay King. Judith did not have enough money to do both separately. So the arrangement she made was to give King the money to buy the trust deed, thereby making King (more than) fully secured on the money that Donald owed. The reason King was brought into the transaction is that Donald’s debt on the remodeling contract was one of the problems that Judith was trying to solve.
We express no opinion on the credibility of Donald, Judith, or King, or of their explanation of the rationale for the entire transaction. The trial court found them credible, and we are bound by that determination. (Lenk v. Total-Western, Inc. (2001) 89 Cal.App.4th 959, 968.) We also note that Norda has never explained any way in which she was harmed by King’s purchase of the trust deed. As long as the loan was in default, the owner of the trust deed had a right to, and was likely to, foreclose. From Norda’s point of view, it did not matter whether the owner of the trust deed was the original lender or King or someone else. Norda has thus failed to explain how Judith’s arrangements with King concerning purchase of the trust deed could have constituted a conspiracy to harm Norda, because she has not explained how King’s purchase of the trust deed did harm (or could have harmed) her. Again, the only potentially valid theory of recovery for Norda that we have been able to discern is that Donald concealed assets in the bankruptcy proceeding. That theory has failed as a matter of fact.
Fourth, Norda argues that “King had no standing to claim any part of the proceeds from the sale of the... Property, ” because the remodeling contract was between Donald and Marcole Investments & Construction, Inc., not between Donald and King. We disagree. Because King bought the trust deed, he was entitled to proceeds from the foreclosure sale under the trust deed, regardless of whose name was on the remodeling contract.
Fifth, Norda contends that Donald’s debts to Judith, King, and Marcole Investments & Construction, Inc. were discharged in Donald’s bankruptcy. Norda does not explain how that contention is relevant to her theory of recovery, described above, particularly given that Norda does not contend that the bankruptcy discharge extinguished the loan against the Property, which was secured by the trust deed. As long as the trust deed was not purchased by Donald (through King and/or Judith) and with Donald’s hidden money, Norda’s theory fails.
Sixth, Norda argues that the judgment is not supported by substantial evidence. For the reasons already given, we disagree.
Seventh, Norda argues that after she filed her notice of appeal the trial court lacked jurisdiction to amend the judgment to include an award of attorney fees to Judith and King and to enter a separate order awarding attorney fees to Donald. Norda acknowledges that “the filing of a notice of appeal does not deprive the trial court of jurisdiction to award attorney fees as costs posttrial.” (Bankes v. Lucas (1992) 9 Cal.App.4th 365, 368.) As a result, Norda’s only objection to the attorney fees awards is that they were procedurally improper because the original judgment did not contain an award of attorney fees (in an unspecified amount to be determined later). As authority, Norda cites Bankes v. Lucas, supra, but that case did not hold that such a procedure is required. (See Bankes v. Lucas, supra, 9 Cal.App.4th at p. 369.) Moreover, the California Rules of Court expressly contemplate that a motion for an award of attorney fees may be filed after entry of judgment, because such a motion may be filed any time “within the time for filing a notice of appeal.” (Cal. Rules of Court, rule 3.1702(b)(1).) We therefore conclude that Norda’s procedural objection to the attorney fees awards is not well taken.
Bankes v. Lucas reversed an award of attorney fees on two alternative grounds: (1) Because of a partial reversal of the judgment on the merits, there was no longer a prevailing party, and (2) the motion for attorney fees was untimely. (Bankes v. Lucas, supra, 9 Cal.App.4th at pp. 369-372.) The holding concerning timeliness has since been superseded by amendments to the California Rules of Court. (See Lee v. Wells Fargo Bank (2001) 88 Cal.App.4th 1187, 1196-1198; see also Cal. Rules of Court, rule 3.1702.)
Norda also argues that the award of attorney fees to Donald violates the one final judgment rule. Norda cites no authority for that claim, and we reject it. A postjudgment award of attorney fees does not violate the one final judgment rule. Rather, it is a separately appealable postjudgment order, and the normal procedure for challenging both the judgment and the order is to file two separate appeals. (See Torres v. City of San Diego (2007) 154 Cal.App.4th 214, 222.)
Eighth, Norda argues that the trial court abused its discretion when it denied her motion for sanctions against King and his counsel for failing to meet and confer before filing certain discovery motions. In response, King argues that Norda had waived her objections to the discovery by failing to respond to it in a timely fashion, that thereafter King requested responses without objections (because all objections had been waived), and that only after Norda failed to agree to respond without objections did King move to compel and also move for sanctions to recover the costs of moving to compel. Only after the hearing on King’s ex parte application for an order shortening time on the motion to compel did Norda respond to the discovery (without objections). That chronology is clearly set forth in the trial court’s minute order (which denied both Norda’s and King’s requests for sanctions), and Norda does not dispute it. We conclude that the court did not abuse its discretion by denying Norda’s request for sanctions. (Liberty Mutual Fire Ins. Co. v. LcL Administrators, Inc. (2008) 163 Cal.App.4th 1093, 1102 [rulings on discovery sanctions are reviewed for abuse of discretion].)
Donald, Judith, and King also move for appellate sanctions on the ground that the appeal is frivolous. We conclude that the appeal is not so wholly lacking in merit as to warrant an award of sanctions, so we deny the motion.
DISPOSITION
The judgment is affirmed. The parties shall bear their own costs of appeal.
We concur: MALLANO, P. J., CHANEY, J.