Opinion
F084829
04-11-2024
LUCKY LEE GOLD, Plaintiff and Respondent, v. BRYAN SCOTT SCHOONOVER, Individually and as Personal Representative, etc., et al., Defendants and Appellants.
Gilmore Magness Janisse and David M. Gilmore for Defendants and Appellants. Brown & Charbonneau, Gregory G. Brown, Mark M. Higuchi and Joseph M. Dankert for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Fresno County. No. 16CECG02260 Rosemary T. McGuire, Judge.
Gilmore Magness Janisse and David M. Gilmore for Defendants and Appellants.
Brown & Charbonneau, Gregory G. Brown, Mark M. Higuchi and Joseph M. Dankert for Plaintiff and Respondent.
OPINION
PENA, ACTING P. J.
This appeal concerns the scope of relief available under the Uniform Voidable Transactions Act (UVTA; Civ. Code, § 3439 et seq.). "The UVTA is a contemporary retooling of the common law remedies available to unsecured creditors seeking payment from debtors who evade collection." (Nagel v. Westen (2021) 59 Cal.App.5th 740, 747.) Creditor status is recognized even when the right to payment is disputed or has not yet been adjudicated. (Civ. Code, § 3439.01, subds. (b), (c).) The creditor herein is Lucky Lee Gold (Gold). The debtor was Gold's ex-wife, Monalisa Berbey (Berbey), who died while the action was pending in the trial court.
When Gold was on the verge of obtaining a substantial monetary judgment against Berbey in a separate case, Berbey began taking cash loans against two parcels of real estate. She had remarried by that point, but the real estate was owned as her separate property. Berbey transferred the loan proceeds to her new spouse, Bryan Scott Schoonover (Schoonover).
After draining most of the equity from her real estate, Berbey transferred ownership of the properties to limited liability companies owned and controlled by herself and Schoonover: Wonderful Cherries, LLC, and 405 E. Broadway, LLC. While the current lawsuit was pending, title to one of the properties was transferred from Wonderful Cherries, LLC, to Schoonover. Schoonover then pulled additional cash out of the property by refinancing the mortgages with another lender. The other property, which had been transferred to 405 E. Broadway, LLC, was sold to a third-party nonlitigant. Schoonover, in his capacity as manager of the LLC, transferred most of the net sale proceeds to himself.
Following a bench trial on three UVTA causes of action, the trial court voided the transfers of the property Berbey had deeded to Wonderful Cherries, LLC, prior to the LLC deeding it to Schoonover individually. The trial court also awarded Gold a money judgment equivalent to the loan proceeds transferred from Berbey to Schoonover ($569,000); the loan proceeds obtained directly by Schoonover while holding title to one of the properties ($107,925.15); and the sale proceeds obtained by Schoonover from 405 E. Broadway, LLC ($101,674.52). Liability for the entire money judgment ($778,599.67 plus interest and costs) was declared to be joint and several among the Estate of Monalisa Berbey, Schoonover, Wonderful Cherries, LLC, and 405 E. Broadway, LLC (collectively, appellants).
At the time of trial, Gold had already obtained a judgment against Berbey in the amount of approximately $900,000. Because the current lawsuit sought remedies to aid Gold in enforcing the underlying obligation, Schoonover, in his capacity as the personal representative of the Estate of Monalisa Berbey, argues the new money judgment against the estate constitutes impermissible double recovery. We agree with this argument and will order the current judgment be modified accordingly.
Schoonover, Wonderful Cherries, LLC, and 405 E. Broadway, LLC, argue the money judgment against them is invalid because they never stood in a debtor/creditor relationship with Gold. This argument lacks merit. The UVTA authorizes money judgments against the "first transferee of the asset or the person for whose benefit the transfer was made," and also against an "immediate or mediate transferee of the first transferee." (Civ. Code, § 3439.08, subd. (b)(1)(A), (B).) However, the record does not support the blanket imposition of joint and several liability against all appellants for all transactions. For example, Berbey made fraudulent/voidable transfers to Schoonover in amounts totaling $569,000 prior to the formation and existence of Wonderful Cherries, LLC. The judgment must be modified to reflect the proven culpability of each party.
Although framed differently by appellants, the main issue is whether there was a material variance between the theories pleaded in the operative complaint and the trial court's rationale for imposing a money judgment for what it characterized as Gold's economic damages. (See Code Civ. Proc., §§ 469, 470.) As we discuss, "variance between the allegations of a pleading and the proof [at trial] will not be deemed material unless it has actually misled the adverse party to his prejudice in maintaining his action or defense on the merits." (Lewis v. Hankins (1989) 214 Cal.App.3d 195, 201.) There was a variance between Gold's pleading and proof, but appellants were not prejudiced by it.
We affirm in part, reverse in part, and remand for further proceedings.
APPELLANTS' BRIEFING DEFICIENCIES
An opening brief on appeal must provide "a summary of the significant facts limited to matters in the record." (Cal. Rules of Court, rule 8.204(a)(2)(C).) The summary in appellants' opening brief is mostly cut and pasted from their posttrial brief to the trial judge, which was filed long before the record on appeal was prepared. Appellants neglected to update the record citations from their earlier brief, which were based on the court reporter's daily transcripts. Consequently, none of the "RT" citations in appellants' opening brief correspond to the reporter's transcript in the record on appeal. To put it bluntly, the "RT" citations are useless. Many of appellants' substantive arguments are also cut and pasted from their posttrial brief, so the indecipherable "RT" citations appear throughout the opening brief.
"Counsel is obligated to refer us to the portions of the record supporting his or her contentions on appeal." (Sharabianlou v. Karp (2010) 181 Cal.App.4th 1133, 1149.) This requires citation to the "page number of the record where the matter appears." (Cal. Rules of Court, rule 8.204(a)(1)(C).) "Where, as here, [appellants] have failed to cite that evidence, they cannot complain when we find their arguments unpersuasive." (Karp, at p. 1149.)
Appellants' opening brief is also replete with record citations using the unexplained abbreviation "TE." We can deduce that "TE" stands for Trial Exhibit, but the citations merely reference the exhibit number, e.g., "TE 184." Appellants do not indicate where within the 1,832-page clerk's transcript any of the exhibits are located. The exhibits are not presented in numerical order within the clerk's transcript, nor are they listed in numerical order in the index. Many of the exhibits are lengthy, but appellants never explain what portions of the cited exhibits are germane to their assertions. Appellants even cite to trial exhibits that were not included in the record on appeal. "[I]t is not our responsibility to scour the appellate record for evidence to support a party's position." (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1270.)
Furthermore, appellants present as facts certain positions rejected by the trial court and thus inconsistent with the trial court's ultimate findings. This is another consequence of the cut-and-paste approach to appellate briefing. In particular, appellants maintain Schoonover held ownership interests in the subject real estate despite the trial court having found those assets were solely owned by Berbey at the time of the voidable transactions. "'As required by the rules of appellate procedure, we state the facts in the light most favorable to the judgment.'" (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 286; see, e.g., Phillippe v. Shapell Industries (1987) 43 Cal.3d 1247, 1252.)
FACTUAL AND PROCEDURAL BACKGROUND
The complicated factual and procedural history is best explained through a chronological summary of the relevant events.
2002-2009
Gold and Berbey married in March 2002 and separated in January 2008. Berbey petitioned for divorce, reportedly due to Gold's alleged affair with his current wife. Gold's marriage to Berbey was legally terminated in September 2008, but the family court reserved jurisdiction to divide the marital assets. All reserved issues were litigated and decided in Orange Superior Court case No. 08D000206 ("the divorce case").
Gold and Berbey resided in San Clemente during their marriage. Berbey was awarded the marital home ("the San Clemente house") in the divorce, but it was encumbered by two mortgages in Gold's name. As stated in a judgment on reserved issues filed in March 2009, Berbey took the house "subject to all existing liens, claims and encumbrances." The judgment further imposed the following obligations and restrictions:
"At such time as it is feasible to refinance the existing first and second deeds of trust secured by the [San Clemente house], petitioner [Berbey] shall use her reasonable best efforts to refinance both loans as soon as practicable to satisfy in full [those] encumbrances.
"As a material part of the consideration for respondent [Gold] conveying all right, title and interest in the [San Clemente house] to petitioner, petitioner shall hereafter assume, pay, indemnify and hold respondent harmless in connection with all liens, claims and encumbrances relating to the [San Clemente house]. Petitioner shall hereafter continue to make all monthly mortgage payments on both the first and second deeds of trust in a timely manner and keep all accounts current.
"In the event that petitioner defaults in making any mortgage payments in connection with the [mortgages], and fails to cure such default within thirty (30) days of the date a payment was due, the [San Clemente house] shall be forthwith listed for sale and thereafter sold.
"In the event of any deficiency or costs owed in connection with the property as a result of such sale or any foreclosure, petitioner further shall assume, pay, indemnify and hold respondent harmless in connection with all such obligations.
"Should respondent, in order to preserve respondent's credit, elect to cure any default in connection with any encumbrance secured by the [San Clemente house], and thereafter makes payments pending sale of the [San Clemente house], petitioner shall reimburse respondent for all monies paid by respondent to keep the [San Clemente house] current pending the sale of the property."
2010
In 2010, Gold married his current wife, Lynette.
2011
In December 2011, Berbey purchased farmland in Visalia that included approximately 79 acres of cherry orchards (the "Visalia property"). She took title to the Visalia property in her own name, as her "sole and separate property." Berbey also retained ownership of the San Clemente house.
2012-2013
In August 2012, Berbey married Schoonover. They were already living together in the San Clemente house, and they continued to reside there for at least another year.
2014
By mid-2014, five years after receiving the San Clemente house in the divorce, Berbey had yet to fulfill her obligation to refinance the first and second mortgages that were still in Gold's name. Berbey had also fallen behind on the property taxes.
Gold communicated with Berbey regarding his concerns about the property taxes and status of the mortgage payments. He urged Berbey to consult with a realtor and sell the home. Berbey eventually did put the house up for sale, but it did not sell.
In September 2014, Gold received formal notice that the first mortgage was in default and delinquent in the amount of $19,000 (rounded). In October 2014, Gold filed a request for an order (RFO) in the divorce case seeking permission to sell the property himself. In a supporting declaration, Gold alleged Berbey's unsuccessful efforts to sell the San Clemente house were due to it being listed at an "unrealistic price."
Gold ultimately made payments of approximately $60,000 to cure the mortgage arrearages and protect his credit rating.
2015
Events Preceding the Subject Transactions
On February 25, 2015, the family court ordered the San Clemente house to be sold and granted Gold full control over the sale, including "the selection of a real estate agent, listing price, and acceptance of an offer to purchase."
In April 2015, Gold's wife, Lynette, bought the San Clemente house with her own separate property funds. The purchase price was $1,450,000. Gold has testified it was necessary for him to "come out of pocket" to complete the sale. He paid approximately $115,500 of his own money into escrow to cover a "shortfall ... comprised of, among other things, delinquent property taxes, homeowner's association fees, realtor commission and other fees and costs."
Less than two months later, Lynette Gold sold the San Clemente house for approximately $1.6 million to a third-party buyer.
In May 2015, Berbey filed a RFO in the divorce case seeking approximately $150,000 from Gold, plus another $10,000 in attorney's fees. Berbey alleged Gold had breached fiduciary duties owed to her by selling the San Clemente house to his current wife for a "discounted" and "below market" price.
On August 13, 2015, Gold filed his own RFO in the divorce case seeking reimbursement of approximately $182,000 from Berbey. The figure comprised the sums Gold had paid to cure the mortgage arrearages and back taxes, and for all other fees and costs associated with his sale of the San Clemente house. Gold also requested approximately $51,000 in attorney's fees. In a supporting declaration, Gold attested to information and belief that Berbey was in the process of selling her Visalia property and would likely receive over $1 million in profit from the sale.
The competing RFOs were scheduled to be heard in October 2015. For purposes of the UVTA, Gold's RFO constituted a "claim" in the amount of approximately $232,730, plus accruing interest and ongoing attorney's fees. (Civ. Code, § 3439.01, subd. (b).)
Key Transactions and Events
Berbey sold her Visalia property for $1,815,000. The grant deed from Berbey to the buyers was notarized on August 18, 2015, but other documents in the record suggest escrow closed on or about September 2, 2015.
Berbey's profit from the sale was approximately $900,000. She used that money to acquire two properties through a tax-deferred, like-kind exchange (commonly known as a "1031 exchange"). (See 26 U.S.C. § 1031.) The 1031 exchange was done on or about September 4, 2015.
Berbey purchased a multiunit residential property located at 405 East Broadway Avenue in Montesano, Washington ("the Washington property"). Title was conveyed to her as "a married woman, as her separate estate." (Capitalization omitted.) The purchase price was $385,000. The evidence indicates Berbey paid the full amount and thus initially owned the Washington property free and clear of any liens.
Berbey also purchased a roughly 16-acre parcel of farmland in Selma, California, which included a residential dwelling. The previous owners were raisin farmers, but Berbey and Schoonover had plans to remove the vines and plant cherry trees. Because the property is located on Nebraska Avenue, appellants refer to it as "the Nebraska property." Gold calls it the "Selma property." For the sake of clarity, we use Gold's nomenclature.
Berbey took title to the Selma property as "a married woman as her sole and separate property." The purchase price was approximately $600,000. Having used $385,000 of the $900,000 exchange money to purchase the Washington property, Berbey would have had only $515,000 remaining to put toward the Selma property. This is consistent with testimony by Berbey and Schoonover that her acquisition of the Selma property required seller carry-back financing in the amount of $85,000. Accordingly, Berbey executed an $85,000 promissory note and a deed of trust in favor of the sellers at or near the time of sale.
On September 11, 2015, just a few days after her purchase of the Selma property, Berbey obtained a cash loan from the sellers in the amount of $165,000 ("the Emmersen loan"). The Emmersen loan was secured by a second deed of trust on the Selma property. The funds were immediately disbursed in the form of a cashier's check payable to Berbey. The contemporaneously executed deed of trust was not filed with the county recorder's office until two months later.
On September 18, 2015, Berbey wired $150,000 of the Emmersen loan proceeds to Landhome Investments, LLC (Landhome). At the time, Landhome owned a certain 176 acres of land (estimated size) in Amador County ("the Amador County property"). It is undisputed this transaction was for the benefit of Schoonover, specifically as payment toward a lease with an option to buy the Amador County property, which Schoonover had entered into with Landhome.
On September 23, 2015, Berbey was deposed in connection with Gold's pending RFO and a related lawsuit that Berbey and Schoonover had filed against Gold and his wife. In her deposition, Berbey falsely testified to not currently owning any real estate, and to not having owned any real estate in the past five years except for the San Clemente house and the Visalia property. In truth, Berbey then owned both the Selma property and the Washington property. Gold's efforts to discover and/or confirm this information were further thwarted by Berbey's legal counsel instructing her not to disclose her current address or even the city in which she then resided (Selma).
On September 24, 2015, Berbey created Cedar Mill Farms, LLC, a California limited liability company. This entity was a defendant in the current lawsuit but is not a party to this appeal. Although Gold's claims against the company were unsuccessful, we explain its involvement in the case to provide a more complete background.
There is conflicting evidence regarding the extent of Berbey's connection to Cedar Mill Farms, LLC. Although Schoonover testified Berbey was never an "owner" and it was him who "put [it] together," Berbey signed the articles of organization as the sole organizer. Berbey therefore was, by legal definition, the person who formed the company. (Corp. Code, §§ 17701.02, subd. (u), 17702.01, subd. (a).).
On October 8, 2015, Berbey created 405 E. Broadway, LLC, a Washington limited liability company. According to the membership certificates, Berbey held a 40 percent interest in the company. Schoonover held the remaining 60 percent interest.
On October 9, 2015, Gold's and Berbey's competing RFOs were heard in the divorce case. The matter was not resolved, and the hearing was continued to a later date.
During the final week of October, the Washington property was transferred from Berbey to 405 E. Broadway, LLC, and from the LLC back to Berbey. The first transfer was evidently done to enable the LLC to obtain a loan secured by the Washington property. According to Schoonover, the lender "did not want to loan to the LLC," hence the quick transfer of title back to Berbey "as her Separate Estate."
On or about October 28, 2015, Berbey obtained a $250,000 loan from a private lender ("the Ysais loan") for which she alone executed a promissory note. The loan was secured by a deed of trust on the Washington property, which was recorded in the County of Grays Harbor, Washington, on October 30, 2015. The $250,000 was wired to Schoonover's personal bank account. Schoonover has admitted under oath that he, in turn, transferred the entire amount to Cedar Mill Farms, LLC.
Further proceedings in the divorce case took place on November 6, 2015.
On November 30, 2015, a minute order issued in the divorce case regarding the parties' competing RFO's. The family court ruled against Berbey and in favor of Gold. The minute order indicated that a forthcoming judgment would likely exceed $250,000.
Two days later, on December 2, 2015, Berbey executed a promissory note and third deed of trust on the Selma property to obtain a $180,000 loan from another private lender (the "Lowers loan"). On December 8, 2015, Berbey wired most of the loan proceeds ($169,000) to Schoonover's personal bank account. Schoonover has admitted under oath that he, in turn, transferred the entire amount to Cedar Mill Farms, LLC.
The very next day, December 9, 2015, Berbey executed and recorded a deed transferring the Selma property, which had been a separate property asset, to herself and Schoonover as joint tenants. On the same date, Berbey and Schoonover executed and recorded a homestead declaration on the Selma property. (See Code Civ. Proc., § 704.920.)
Under California law, there is an automatic homestead exemption for debtors and their spouses. (See Code Civ. Proc., § 704.720.) However, the recording of a declared homestead exemption provides additional protection against the collection efforts of a judgment creditor. (See id., §§ 704.940-704.960; Amin v. Khazindar (2003) 112 Cal.App.4th 582, 588-589.) As such, the timing of this event was probative of Berbey's and Schoonover's intent vis-a-vis the other transactions that occurred during the same general timeframe.
On December 22, 2015, Schoonover created Wonderful Cherries, LLC, a California limited liability company. According to the minutes of the organizational meeting, Schoonover and Berbey were both members and managers of the company. The membership interests were split 60/40 in favor of Schoonover.
2016
On January 19, 2016, Berbey and Schoonover, acting as joint tenants, deeded the Selma property to Wonderful Cherries, LLC.
On March 4, 2016, a judgment issued in the divorce case as to Gold's RFO. Berbey was held liable for, and ordered to pay, $265,754 (rounded). The sum included $60,000 in attorney's fees.
On March 28, 2016, Gold filed the current UVTA lawsuit in the Orange Superior Court against Berbey, Schoonover, Wonderful Cherries, LLC, and 405 E. Broadway, LLC.
In April 2016, Gold amended his UVTA complaint to add as defendants the lenders involved in the Emmersen, Ysais, and Lowers loans. Gold also recorded a notice of pendency of action (lis pendens) on the Selma property with the recorder's offices in Orange and Fresno Counties. (See Code Civ. Proc., §§ 405.20 &405.22.) Berbey and Schoonover would later attempt to circumvent the protections of the lis pendens law. For reasons that will soon be apparent, their conduct in this regard influenced the trial court's eventual findings in favor of Gold and against appellants.
"As a practical matter, the filing of a lis pendens usually clouds the title to the property and prevents its transfer until the litigation is resolved or the lis pendens is expunged." (Malcolm v. Superior Court (1981) 29 Cal.3d 518, 523, fn. 2; accord, Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 651.).
In May 2016, Berbey appealed the RFO rulings in the divorce case to the Fourth Appellate District, Division Three.
The eventual appellate decision, In re Marriage of Berbey and Gold (Oct. 23, 2017, G053495) (nonpub. opn.) [2017 Cal.App.Unpub. LEXIS 7317; 2017 WL 4769420], was introduced at trial and the trial court took judicial notice of it. On our own motion, we also take judicial notice of the opinion for the limited purpose of explaining the underlying procedural background. (See, e.g., ZF Micro Devices, Inc. v. TAT Capital Partners, Ltd. (2016) 5 Cal.App.5th 69, 73, fn. 3.).
In June 2016, Gold recorded a lis pendens on the Washington property in Grays Harbor County, Washington.
In July 2016, Gold's UVTA lawsuit was transferred from Orange County to the Fresno Superior Court.
In September 2016, Berbey and Schoonover filed a cross-complaint against Gold and his wife Lynette. That same month, Schoonover testified under oath in a debtor's examination concerning an unrelated lawsuit. As relevant here, Schoonover testified he was not involved in Berbey's purchase of the Selma property and had never been an owner of the Selma property.
In late 2016, Gold dismissed his claims against the lenders involved in the Emmersen, Ysais, and Lowers loans.
2017
In late 2016 or early 2017, Schoonover exercised his option to buy the Amador County property from Landhome. The purchaser of record, however, was Cedar Mill Farms, LLC. The grant deed was recorded on February 20, 2017.
In May 2017, Gold filed a related action against Berbey, Schoonover, and Cedar Mill Farms, LLC. The related action was eventually consolidated with the current lawsuit.
On June 30, 2017, Berbey and/or other accomplices caused a document entitled "Release of Lis Pendens" to be recorded in the County of Grays Harbor, Washington. The document, which was signed by Berbey, falsely indicated Gold's UVTA action was no longer pending. This was the first of two attempts to circumvent the lis pendens Gold had recorded on the Washington property.
On October 23, 2017, the Fourth Appellate District, Division Three, issued its opinion in the appeal of the RFO rulings in the divorce case. The rulings were reversed, and the matter was remanded to the family court "to conduct an evidentiary hearing to determine whether Gold breached his fiduciary duty to Berbey when he sold the [San Clemente house], and then to decide [the competing RFO's] based on that determination."
The PS Funding Loan
The following events pertain to a $397,000 loan (rounded) obtained by Schoonover from PS Funding, Inc., by further encumbering the Selma property ("the PS Funding loan"). These events occurred while the current lawsuit was pending and were unknown to Gold at the time.
On October 30, 2017, Berbey and/or other accomplices caused a false Acknowledgement of Satisfaction of Judgment (Judicial Council of California, Form EJ-100) regarding the lis pendens on the Selma property to be filed with the county recorder's office. The notarized form was signed by Berbey in the space designated for the signature of the "judgment creditor or assignee of the creditor or attorney." (Capitalization omitted.) A false address was listed for the creditor, i.e., Gold. In a space provided for the "assignee of record, if any," Berbey or an accomplice typed the name and address of her (and Schoonover's) attorneys of record at the time. As indicated on the first page of the filing, the recorder's office was instructed to mail the recorded document to Schoonover at an address in Kingsburg.
On November 17, 2017, Berbey, individually, and Berbey and Schoonover, as managers of Wonderful Cherries, LLC, executed a grant deed conveying the Selma property to Schoonover "as his sole and separate property."
Several other transactions occurred on November 17, 2017. Schoonover signed, and provided to PS Funding, Inc., an owner's affidavit falsely declaring there were no currently pending actions or proceedings relating to the Selma property. Schoonover also signed, and provided to PS Funding, Inc., a sworn declaration in which he declared the Selma property was not his primary residence, and that his "true and only principal residence" was an address in Kingsburg. The address he provided was actually a private mailbox that he rented from, and was located within, a UPS Store.
The PS Funding loan proceeds were disbursed on November 20, 2017. Approximately $254,000 was immediately used to pay off the first and second mortgages on the Selma property. In other words, to repay the principal and interest on the $85,000 seller carry-back financing and the $165,000 Emmersen loan. The net remainder, after loan fees, costs, and miscellaneous charges, was $107,925.15. Pursuant to Schoonover's instructions, the money was wired to his personal bank account.
2018
In February 2018, Gold filed the operative pleading in this case: a second amended consolidated complaint. The first of three UVTA causes of action therein was asserted against Berbey, Schoonover, and Wonderful Cherries, LLC. The second cause of action was against Berbey, Schoonover, and 405 E. Broadway, LLC. The third cause of action was against Berbey, Schoonover, and Cedar Mill Farms, LLC. Gold's prayer for relief included requests for general, special, and punitive damages.
Trial was originally set for August 2018. However, in light of the pending remand proceedings in the divorce case, the parties stipulated to vacating the trial date.
On August 8, 2018, the family court once again ruled in favor of Gold and against Berbey. The court found "there was no believable evidence that the sales price of the [San Clemente house] was below fair market value," i.e., the price at which Gold had sold the house to his wife in April 2015. Further proceedings were scheduled for late August regarding Gold's request for attorney's fees.
In October 2018, a new judgment was issued in the divorce case regarding Gold's RFO. He was awarded $180,862 (rounded), not including attorney's fees, which the family court noted was based on figures "identical to the amounts set forth in the Court's March 4, 2016 Order, with the exception of [an] updated interest calculation and the striking of [previously awarded broker's commissions of $58,000]."
In December 2018, the family court issued an addendum to the October 2018 judgment. Gold was awarded an additional $613,000 "for attorneys fees and costs," plus $100,000 in sanctions against Berbey pursuant to Family Code section 271 and Code of Civil Procedure section 128.5. The cited statutes are typically invoked when parties or their legal counsel have acted in bad faith and/or for the purpose of causing unnecessary delay. According to Gold, the sanctions against Berbey were "for her continuous delays, obstreperous conduct during the litigation, false testimony and other wrongful conduct."
2019
Sale of the Washington Property
In early 2019, Schoonover made efforts to sell the Washington property and found a potential buyer. There was at least one obstacle to the sale: the recorded lis pendens on the property.
On February 26, 2019, an unknown person or persons caused a false Acknowledgement of Satisfaction of Judgment (Judicial Council of California, Form EJ-100) regarding the lis pendens on the Washington property to be recorded in the County of Grays Harbor, Washington. The form (and false information therein) was almost identical to the acknowledgment Berbey had signed in 2017 regarding the Selma property. As before, there was a request for the recorded document to be mailed to Schoonover at an address in Kingsburg.
A few days later, during the first week of March 2019, the prospective buyer and 405 E. Broadway, LLC, entered into a written purchase and sale agreement for the Washington property. Schoonover signed the contract on behalf of the LLC.
In approximately March or April 2019, Schoonover and Berbey hired an attorney in Washington to help them remove the lis pendens on the Washington property. On April 23, 2019, the attorney filed a complaint and "motion to cancel the lis pendens." Berbey and Schoonover provided sworn declarations in support of the motion. Gold was not provided notice of these legal proceedings, nor was he aware they were happening. The unopposed motion was granted and the lis pendens was removed.
In May 2019, the Washington property was sold for $500,000. The principal and interest on the Ysais loan was repaid with $255,400 of the proceeds. A net profit of $168,148 (rounded) was deposited into the bank account of 405 E. Broadway, LLC. On May 3, 2019, Schoonover wrote himself a $100,000 check from the company account. On May 10, 2019, he wrote himself another check in the amount of $1,674.52.
Other Relevant Events
On June 15, 2019, Berbey died from a terminal illness. According to Schoonover's testimony, she was 52 years old. The parties thereafter stipulated to vacating all trial proceedings, which were scheduled to begin in August of that year. The parties later stipulated to allowing Gold's claims against Berbey to be litigated against Schoonover in his capacity as personal representative of the Estate of Monalisa Berbey, and to have him added as a defendant in such capacity.
2020
In April 2020, appellants' legal counsel moved to withdraw from the case. The motion was granted. Appellants' present counsel substituted into the case in July 2020.
2021
In July 2021, the trial court granted Gold's unopposed motion for a judgment on the pleadings as to three of six causes of action in Berbey's and Schoonover's crosscomplaint. The cross-complainants later consented to having the remaining causes of action dismissed with prejudice.
Although trial had been rescheduled for August 2021, it was continued again after all parties waived their respective rights to a jury. A bench trial was finally conducted in November 2021. Closing arguments were submitted via posttrial briefing the following month.
2022-Present
In January 2022, the trial court orally announced its decision on the record. Gold was instructed to submit a proposed statement of decision by the following month, which he did. Meanwhile, several things happened causing further delays, including a temporary stay of the proceedings due to Schoonover's unsuccessful attempt to declare Chapter 12 bankruptcy.
On June 10, 2022, the trial court issued its final written statement of decision. The court ruled in favor of Gold as to his claims against appellants, but not as to his claims against Cedar Mill Farms, LLC. As earlier noted, Cedar Mill Farms, LLC, is not a party to this appeal.
The trial court found, inter alia, that appellants "conspired to and did transfer title to the Selma Property and cash to Schoonover either directly or on his behalf with the intent to hinder, delay or defraud Mr. Gold in his attempts to collect the amounts owed by Ms. Berbey." The ruling continued: "The preponderance of the evidence establishes that Mr. Schoonover was aware of [Gold]'s claim related to the San Clemente property. This includes his testimony that he was fully aware of what happened concerning the mortgage payments, was aware of [an] adverse ruling granting the RFO, and was aware of the lis pendens. The fact that the family law ruling was appealed is irrelevant."
Schoonover's defense at trial was an alleged 60 percent ownership interest in the Visalia property. He thus claimed a 60 percent interest in the profit used to buy the Selma property and Washington property, and he alleged entitlement to a corresponding percentage of all money borrowed against those properties. The success or failure of the defense case hinged, in significant part, upon how the trial court viewed a one-page contractual agreement allegedly executed by Berbey and Schoonover in September 2011. Labeled as an "ownership split agreement" regarding the Visalia property, the document was unwitnessed, unnotarized, and unrecorded, and Schoonover was unable to produce the original.
In appellants' posttrial brief, it was argued "Gold presented no evidence to challenge the [ownership split] agreement," which had been introduced as "Joint Exhibit #184." The argument overlooked repeated instances during trial when Schoonover was impeached with prior testimony denying any ownership of the Visalia property or the Selma property. The impeachment included, specifically in relation to the Visalia sale proceeds, his admission that it "wasn't my money." The trial court thus ruled as follows while announcing its decision in January 2022:
"[Plaintiff's counsel], on behalf of Mr. Gold, strongly objected to that document being admitted into evidence because the original had never been produced, and there wasn't sufficient foundation. And the Court admitted it. But part of my assessment in this case is that, based on the significant conflict in the testimony that undermines the credibility in my mind of both Mr. Schoonover and Ms. Berbey, ... the Court does not view Exhibit 184 as being a credible exhibit.. . . [¶] So . . . I'm going to go through some of the, um, conflicts in testimony that have caused me to, um, determine that neither Ms. Berbey or Mr. Schoonover are credible. So hence, my disregard of Exhibit 184."
The trial court went on to cite examples of Berbey's and Schoonover's false and contradictory testimony. The same examples are included in the written statement of decision.
In terms of relief and remedies, the trial court set aside (voided) three transfers of the Selma property: (1) Berbey's deeding of the property to herself and Schoonover as joint tenants on December 9, 2015; (2) the January 2016 conveyance from Berbey and Schoonover to Wonderful Cherries, LLC; and (3) the transfer of title in November 2017 from Wonderful Cherries, LLC, to Schoonover. Therefore, title to the property effectively reverted to Berbey as a separate property asset now held by her estate.
The trial court further awarded "damages in favor of [Gold]" and against appellants in the amount of $778,599.67, plus $318,954.38 in prejudgment interest, for which all appellants were declared jointly and severally liable. The stated basis for the monetary judgment was as follows:
"The amount of damages reflects the benefit received by Mr. Schoonover as a result of the subject fraudulent transfers, specifically, the Emerson [sic] loan ($150,000), the Lowers loan ($169,000), the PS Funding, Inc. loan secured by the Selma property ($107,925.15), the Ysais loan ($250,000), and the proceeds from the sale of the [Washington] property ($101,674.52)."
Gold's request for punitive damages was denied.
Judgment was entered on June 21, 2022, and notice of entry was filed two days later. Appellants filed a timely notice of appeal on August 22, 2022. Due to the granting of multiple requested extensions, the appellate briefing was not completed until December 2023.
DISCUSSION
I. Legal Overview
"The purpose of the UVTA is to prevent debtors from placing, beyond the reach of creditors, property that should be made available to satisfy a debt." (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 817.) Predecessor versions of the UVTA were known as the Uniform Fraudulent Conveyance Act and the Uniform Fraudulent Transfer Act (UFTA). (Wyzard v. Goller (1994) 23 Cal.App.4th 1183, 1188-1189.) The retitling of the UFTA to the UVTA in 2016 "reflected the Legislature's intent to 'reduce misconceptions that the law requires proof of fraudulent intent.' [Citation.] Little else changed in substance." (Nagel v. Westen, supra, 59 Cal.App.5th at p. 747.) Because the UVTA "did not alter the essential elements of a cause of action for a fraudulent or voidable transfer," appellate courts "may rely on opinions addressing the UFTA." (Aghaian v. Minassian (2020) 59 Cal.App.5th 447, 455, fn. 8; see Civ. Code, § 3439.14, subd. (d).)
A transfer of assets or an obligation incurred by a debtor, if done with the intent "to hinder, delay, or defraud any creditor," or without receiving a reasonably equivalent value in exchange therefor, "is voidable as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred." (Civ. Code, § 3439.04, subd. (a).) With limited exceptions, the UVTA uses the terms "asset" and "property" interchangeably, and "property" is defined as "anything that may be the subject of ownership." (Id., § 3439.01, subds. (a), (j).) "'Transfer' means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money _." (Id., § 3439.01, subd. (m).)
Appellants insist a transaction is not voidable under the UVTA if it involves an exchange for reasonably equivalent value. The argument is without merit and refuted by the very authority upon which they purport to rely, Annod Corp. v. Hamilton &Samuels (2002) 100 Cal.App.4th 1286 at page 1294. The cited portion of Annod Corp. quotes from a former version of Civil Code section 3439.04, reciting language now set forth in subdivision (a)(1) and (2). "Section 3439.04 is construed to mean a transfer is fraudulent [voidable] if the provisions of either subdivision (a)(1) or subdivision (a)(2) are satisfied." (Optional Capital, Inc. v. DAS Corp. (2014) 222 Cal.App.4th 1388, 1402, italics added; see Annod Corp., at p. 1294.) As such, a creditor is not required to prove the debtor failed to receive reasonably equivalent value for a transferred asset; "it is sufficient to [show] that the defendant made the transfer 'with "actual intent to hinder, delay, or defraud any creditor of the debtor."'" (Aghaian v. Minassian, supra, 59 Cal.App.5th at pp. 456-457; accord, Lo v. Lee (2018) 24 Cal.App.5th 1065, 1071.)
Under Civil Code section 3439.04, the creditor "has the burden of proving the elements of the claim for relief by a preponderance of the evidence." (Id., § 3439.04, subd. (c).) Gold had the burden to show Berbey's transfers of assets were done with the "actual intent to hinder, delay, or defraud." (Id., subd. (a)(1).) "Whether a debtor had the actual intent to hinder, delay, or defraud a creditor is a question of fact." (Aghaian v. Minassian, supra, 59 Cal.App.5th at p. 456.)
The UVTA provides for the remedy of "[a]voidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim." (Civ. Code, § 3439.07, subd. (a)(1).) Other remedies include attachment, receivership, and "[a]ny other relief the circumstances may require." (Id., subd. (a)(2), (3)(B), (C).) Furthermore, "[u]nless displaced by the [UVTA], the principles of law and equity, including ... estoppel, laches, [and] fraud, ... supplement its provisions." (Id., § 3439.12.) Therefore, "the remedies specified in the UVTA are cumulative and not the exclusive remedy for fraudulent conveyances." (Berger v. Varum (2019) 35 Cal.App.5th 1013, 1019.)
A creditor's remedies against the transferee of an asset involved in a voidable transaction are described in Civil Code section 3439.08. "[T]he creditor may recover judgment for the value of the asset transferred, as adjusted under subdivision (c), or the amount necessary to satisfy the creditor's claim, whichever is less." (Id., subd. (b)(1).) Such a judgment may be entered against the "first transferee of the asset or the person for whose benefit the transfer was made," as well as (with limited exceptions) an "immediate or mediate transferee of the first transferee." (Id., subd. (b)(1)(A), (B).) If the judgment "is based upon the value of the asset transferred, the judgment shall be for an amount equal to the value of the asset at the time of the transfer, subject to adjustment as the equities may require." (Id., subd. (c).)
The transferee in an otherwise voidable transaction may assert, as an affirmative defense, that he or she "took in good faith and for a reasonably equivalent value given the debtor." (Civ. Code, § 3439.08, subd. (a); see Annod Corp. v. Hamilton & Samuels, supra, 100 Cal.App.4th at p. 1294.) When placed at issue, the transferee has the burden of proving good faith and reasonably equivalent value by a preponderance of the evidence. (Civ. Code, § 3439.08, subds. (f)(1), (3), (g); see Nautilus, Inc. v. Yang (2017) 11 Cal.App.5th 33, 40-41 [holding "the trial court erred in placing the burden of proof on [plaintiff] to prove the good faith defense did not apply"]; Ahart, Cal. Practice Guide: Enforcing Judgments and Debts (The Rutter Group 2023) ¶ 3:324, p. 3-134 ["Parties asserting 'good faith' as a defense have the burden of proving same"].) "[A] transferee cannot benefit from the good faith defense if that transferee had fraudulent intent, colluded with a person who was engaged in the fraudulent conveyance, actively participated in the fraudulent conveyance, or had actual knowledge of facts showing knowledge of the transferor's fraudulent intent." (Nautilus, Inc., at p. 37, italics omitted.)
II. Standard of Review
"In reviewing a judgment based upon a statement of decision following a bench trial, we review questions of law de novo. [Citation.] We apply a substantial evidence standard of review to the trial court's findings of fact." (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.) Under the latter standard, "findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings." (Ibid.)
"Venerable precedent holds that, in a bench trial, the trial court is the 'sole judge' of witness credibility. [Citation.] The trial judge may believe or disbelieve uncontradicted witnesses if there is any rational ground for doing so. [Citation.] The fact finder's determination of the veracity of a witness is final. [Citation.] Credibility determinations thus are subject to extremely deferential review." (Schmidt v. Superior Court (2020) 44 Cal.App.5th 570, 582.)
Appellants' position on the standard of review is confusing. Early in the opening brief, they argue for de novo review because "the trial court failed to correctly apply the law" and "because the errors committed here are on the application of the law." Yet some of their claims are presented under headings that read, "There is No Proof An Asset Was Transferred," "There is No Evidence of a Conspiracy," and "Schoonover is a Good Faith Transferee." (Boldface and some capitalization omitted.) Despite being called out on these discrepancies in the respondent's brief, appellants offer this response in their reply:
"The [claims] are legal challenges, not factual challenges. While Appellants certainly believe that the trial court erred in many factual particulars[,] it was the way in which the court applied the law to the facts that is before this court. Such a review is de novo."
Accepting their statements at face value, we disregard appellants' express and implied criticisms of the trial court's factual findings and treat as insufficiently developed, and thus forfeited, most of their arguments implicating the substantial evidence standard. An exception is their claim regarding the voidability of the transfers of title to the Selma property, in which the legal and factual issues are closely intertwined. As for the remaining claims, the brevity of our discussion of the supporting evidence is commensurate with appellants' treatment of the subject in their briefing.
III. Voidability of the Selma Property Transfers
Record title to the Selma property was held in Schoonover's name at the time of trial. As discussed, this resulted from three prior transactions: (1) Berbey deeding the property to herself and Schoonover as joint tenants in December 2015; (2) Berbey and Schoonover deeding the property to Wonderful Cherries, LLC, in January 2016; and (3) Wonderful Cherries, LLC, deeding the property to Schoonover in November 2017. The trial court "set aside," i.e., voided, all three transactions, thereby effectively making the Selma property an asset of the Estate of Monalisa Berbey.
Schoonover challenges the set-aside order on two grounds. As we understand the first argument, which is undeveloped and vaguely asserted, the third transfer cannot be voided because neither Schoonover nor Wonderful Cherries, LLC, stood in a debtor/creditor relationship with Gold. We disagree.
The UVTA permits avoidance of a transfer "to the extent necessary to satisfy the creditor's claim." (Civ. Code, § 3439.07, subd. (a)(1).) The trial court made adverse factual findings as to Schoonover's and Wonderful Cherries, LLC's affirmative defense of being good faith transferees. (Id., § 3439.08, subds. (a), (f)(1).) It is axiomatic that a party cannot convey property in which the party has no present interest. ( See Arques v. Wasson (1877) 51 Cal. 620, 623; Stanley v. Shierry (1958) 158 Cal.App.2d 373, 376 ["It is obvious that the grant deed conveyed only what the grantor owned at the time of its execution; that the grantor could not convey what already belonged to someone else merely by including it within the legal description"]; 3 Miller &Starr, Cal. Real Estate (4th ed. 2023) § 8.58, p. 8-175 ["If a deed purports to convey property that is not owned by the grantor, it is ineffective to convey the property"].) It follows that setting aside the first and second transfers left Wonderful Cherries, LLC, without valid title to convey to Schoonover.
Schoonover's second argument is more complicated. It rests on the principle "[a] creditor has not been injured unless the transfer puts beyond reach property the creditor could subject to payment of his or her debt." (Fidelity National Title Ins. Co. v. Schroeder (2009) 179 Cal.App.4th 834, 845, italics omitted.) As defined by the UVTA, a debtor's assets do not include property "to the extent it is encumbered by a valid lien." (Civ. Code, § 3439.01, subd. (a)(1).) Therefore, overleveraged real estate is not an "asset" to which the UVTA's equitable remedies can be applied. (See, e.g., Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 81-82.) In Mehrtash, the debtor's residence was "heavily mortgaged" and the evidence indicated the property was upside down by tens of thousands of dollars before accounting for a homestead exemption. (Id. at p. 81.) Because the plaintiff creditor "produced no evidence that the value of the property could support any net recovery for her in the event the [subject] conveyance were set aside," the trial court's denial of relief under the UFTA was affirmed on appeal. (Mehrtash, at p. 81.)
In Schroeder, this district agreed "Mehrtash rightly affirmed the long-standing principle that injury in fact is an essential element of a claim under the UFTA," and thus similarly affirmed a trial court's finding of no injury to a plaintiff creditor "because a court-ordered sale of the Fresno property would not have satisfied any portion of the judgment." (Fidelity National Title Ins. Co. v. Schroeder, supra, 179 Cal.App.4th at p. 845, citing Mehrtash v. Mehrtash, supra, 93 Cal.App.4th at p. 80.) The Schroeder opinion also explains that a judgment lien attaches to a declared homestead only "in the amount of any surplus over the total of prior liens and encumbrances plus the amount of the homestead exemption." (Schroeder, at p. 844, citing Code Civ. Proc., § 704.950, subd. (c).) Therefore, when determining whether the debtor's real property is a reachable asset under the UVTA, it is necessary to account for all encumbrances and, if applicable, the homestead exemption. (Schroeder, at p. 844.)
Schoonover's claim is underdeveloped in the opening brief, but the reply brief does provide clarification. Rather than explicitly challenging the sufficiency of the evidence, Schoonover faults Gold for not affirmatively showing the value of the Selma property as of December 2015 and complains the trial court "made no effort to make that assessment." We acknowledge the issue is a close one. However, unlike in Mehrtash and Schroeder, this is not a situation where the trial court ruled against the creditor for lack of proof the property had any recoverable value. (Fidelity National Title Ins. Co. v. Schroeder, supra, 179 Cal.App.4th at p. 838; Mehrtash v. Mehrtash, supra, 93 Cal.App.4th at p. 77.) The trial court necessarily reached the opposition conclusion, i.e., that the preponderance of the evidence showed the Selma property was not completely devoid of value on the date in question. The issue is whether the record adequately supports that conclusion.
We begin with the homestead exemption. "The declaration of homestead protects property from creditors up to the level of exemption." (Tassone v. Tovar (1994) 28 Cal.App.4th 765, 769.) Whether declared or automatic (see fn. 2, ante), the amount of the homestead exemption is determined by Code of Civil Procedure section 704.730. The statute was drastically revised in 2020, and the changes took effect in 2021. (Stats. 2020, ch. 94, § 1.) But between 2013 and 2020, the law was as follows:
"(a) The amount of the homestead exemption is one of the following:
"(1) Seventy-five thousand dollars ($75,000) unless the judgment debtor or spouse of the judgment debtor who resides in the homestead is a person described in paragraph (2) or (3).
"(2) One hundred thousand dollars ($100,000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead a member of a family unit, and there is at least one member of the family unit who owns no interest in the homestead or whose only interest in the homestead is a community property interest with the judgment debtor.
"(3) One hundred seventy-five thousand dollars ($175,000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead any one of the following:
"(A) A person 65 years of age or older.
"(B) A person physically or mentally disabled who as a result of that disability is unable to engage in substantial gainful employment. There is a rebuttable presumption affecting the burden of proof that a person receiving disability insurance benefit payments under Title II or supplemental security income payments under Title XVI of the federal Social Security Act satisfies the requirements of this paragraph as to his or her inability to engage in substantial gainful employment.
"(C) A person 55 years of age or older with a gross annual income of not more than twenty-five thousand dollars ($25,000) or, if the judgment debtor is married, a gross annual income, including the gross annual income of the judgment debtor's spouse, of not more than thirty-five thousand dollars ($35,000) and the sale is an involuntary sale.
"(b) Notwithstanding any other provision of this section, the combined homestead exemptions of spouses on the same judgment shall not exceed the amount specified in paragraph (2) or (3), whichever is applicable, of subdivision (a), regardless of whether the spouses are jointly obligated on the judgment and regardless of whether the homestead consists of community or separate property or both. Notwithstanding any other provision of this article, if both spouses are entitled to a homestead exemption, the exemption of proceeds of the homestead shall be apportioned between the spouses on the basis of their proportionate interests in the homestead." (Code Civ. Proc., former § 704.730; Stats. 2020, ch. 94, § 1; Stats. 2012, ch. 678, § 3.)
Without providing any explanation, Schoonover contends the homestead exemption on the Selma property in December 2015 would have been $150,000. It is unclear how he arrives at this conclusion, but it appears the correct number is $100,000. Schoonover does not allege, nor does the record in any way suggest, that the age-based or disability-based factors existed.
To recap the timeline, Berbey bought the Selma property for approximately $600,000 on or about September 4, 2015. To cover the difference between the purchase price and her 1031 exchange money from selling the Visalia property, Berbey obtained seller carry-back financing in the amount of $85,000. The purchase price is not alone determinative of a property's value, but the trial court could have reasonably concluded that a fair estimate of her equity in the home at that time was $515,000.
Berbey further encumbered the property to secure the $165,000 Emmersen loan on September 11, 2015 ($515,000 - $165,000 = $350,000), and recorded a third deed of trust on December 7, 2015, to secure the $180,000 Lowers loan ($350,000 - $180,000 = $170,000). The transfer of title from Berbey to herself and Schoonover as joint tenants was done on December 9, 2015. Although real estate values constantly fluctuate, there was a reasonable basis for the trial court to conclude the Selma property likely was not entirely devoid of value on the date in question. (See generally Bichai v. DaVita, Inc. (2021) 72 Cal.App.5th 1126, 1139 ["[T]he preponderance of the evidence standard '"simply requires the trier of fact 'to believe that the existence of a fact is more probable than its nonexistence'"'"].) The fact Berbey was able to borrow against the property immediately prior to the transfer is itself probative of that conclusion. Whether the homestead exemption was $100,000 ($170,000 - $100,000 = $70,000) or, using Schoonover's number, $150,000 ($170,000 - $150,000 = $20,000), we are not convinced the evidence is insufficient to support the judgment as a matter of law.
IV. Double Recovery
The Estate of Monalisa Berbey claims the trial court erred by imposing a money judgment against it in this case. Although Gold responds to other arguments mischaracterized by appellants as involving "double recovery" issues, he does not address this specific claim. We agree with the Estate of Monalisa Berbey.
"A well-established principle, applied both at law and in equity, is that a plaintiff is entitled to only a single recovery for a distinct harm suffered, and double or duplicative recovery for the same harm is prohibited." (Renda v. Nevarez (2014) 223 Cal.App.4th 1231, 1237.) Case law thus holds "a creditor who has obtained a judgment for damages against a debtor in a prior action is not entitled under the [UVTA] to recover a personal judgment against the debtor for the amount of money the debtor subsequently transfers to third parties to hinder, delay, or defraud the creditor in collecting on the original judgment." (Id. at p. 1239; accord, Berger v. Varum, supra, 35 Cal.App.5th at pp. 10241025.)
Gold already had a six-figure judgment against Berbey, and later against her estate, throughout most of the litigation and at the time of trial. "The [UVTA] does not impose on the debtor any liability additional to or distinct from the existing claim of the creditor; it simply allows the creditor to obtain '[a]voidance of the transfer ... to the extent necessary to satisfy the creditor's claim.'" (Renda v. Nevarez, supra, 223 Cal.App.4th at p. 1238, quoting Civ. Code, § 3439.07, subd. (a)(1).) Because the present lawsuit was brought to enforce an outstanding judgment, and because the trial court denied Gold's request for punitive damages, there is no basis for a second money judgment against Berbey or her estate. "Double or duplicative recovery for the same items of damage amounts to overcompensation and is therefore prohibited." (Tavaglione v. Billings (1993) 4 Cal.4th 1150, 1159.) The judgment shall be modified to show the Estate of Monalisa Berbey is not liable for the "damages" calculated therein.
V. Joint and Several Liability
When the actions of multiple defendants cause an indivisible injury to the plaintiff, the defendants may be jointly and severally liable for the injury. (Leko v. Cornerstone Bldg. Inspection Service (2001) 86 Cal.App.4th 1109, 1115.) "Joint tortfeasors may act in concert or independently of one another. [Citation.] '_ What is important is the relationship of the tortfeasors to the plaintiff and the interrelated nature of the harm done.'" (Ibid.)
Schoonover, Wonderful Cherries, LLC, and 405 E. Broadway, LLC, all challenge the trial court's imposition of joint and several liability for the monetary judgment. Their arguments are scattered across multiple sections of the opening brief. Some of the objections to joint and several liability have merit. Appellants also raise legitimate issues regarding variances between the operative complaint and the reasons they were held liable, but we ultimately conclude the variances are not prejudicial.
We resolve the assorted claims by first explaining why certain parties are liable for certain transactions and others are not. The final part of the opinion will address the variance between Gold's pleading and proof.
A. The Emmersen Loan
The Emmersen loan of $165,000 was disbursed to Berbey on September 11, 2015. On September 18, 2015, Berbey wired $150,000 to Landhome, a third-party nonlitigant with whom Schoonover had an agreement to lease, with the option to buy, the Amador County property that was later purchased by Cedar Mill Farms, LLC. The source of the $150,000 and the fact the transfer was for Schoonover's benefit were admitted by Berbey and Schoonover under oath.
Under Civil Code section 3439.04, "[a] transfer made or obligation incurred by a debtor is voidable as to a creditor" if made with "actual intent to hinder, delay, or defraud" the creditor. (Id., subd. (a)(1).) The loan was for $165,000, but the judgment imposes liability only for $150,000, i.e., the amount transferred by Berbey to Landhome for Schoonover's benefit. The $15,000 retained by Berbey is not included in the "damages" award.
"Loan proceeds secured by separate property are also separate property." (In re Marriage of Bonvino (2015) 241 Cal.App.4th 1411, 1423.) When Berbey borrowed $165,000 against the Selma property, which she owned as separate property, the loan proceeds were a separate property asset reachable by her creditors. The people who lent the $165,000 were, of course, protected by a security interest in the Selma property. When Berbey transferred $150,000 of the proceeds to Landhome, the money was no longer within Gold's reach as a creditor. "'[A] transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim'" is a voidable transaction under the UVTA. (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 648.)
"The UVTA allows a judgment to be entered against (1) the first transferee of the fraudulently transferred asset, (2) the transfer beneficiary, and (3) any subsequent transferee other than a good faith transferee." (Lo v. Lee, supra, 24 Cal.App.5th at p. 1071, citing Civ. Code, § 3439.08, subd. (b)(1) & (2).) The trial court, having found Berbey acted with the requisite intent under Civil Code section 3439.04, subdivision (a)(1), had authority to enter a judgment against Schoonover, i.e., "the person for whose benefit the transfer was made" (id., § 3439.08, subd. (b)(1)(A)), "for the value of the asset transferred" (id., subd. (b)(1)). The asset was money, so the value is simply determined by the dollar amount ($150,000).
Although the trial court's findings of wrongful intent are not challenged in this appeal, we note that proof of intent under the UVTA "often consists of inferences from the circumstances surrounding the transfer." (Filip v. Bucurenciu (2005) 129 Cal.App.4th 825, 834.) Civil Code section 3439.04, subdivision (b) provides a nonexhaustive list of factors for the trier of fact to consider. They include "[w]hether the transfer or obligation was disclosed or concealed" and "[w]hether the transfer occurred shortly before or shortly after a substantial debt was incurred." (Id., subd. (b)(3) &(10).) Berbey obtained the Emmersen loan, and promptly transferred the proceeds out of Gold's reach, shortly after he asserted a six-figure claim against her that would soon be decided in the divorce case. Berbey was deposed by Gold's legal counsel less than two weeks after the transaction, and she falsely denied owning any real estate.
The timing of the events is important to the issue of joint and several liability. Although Berbey's receipt of the Emmersen loan and transfer of the $150,000 proceeds to Landhome occurred between September 11 and 18, 2015, the limited liability companies were not formed until later. The Washington company, 405 E. Broadway, LLC, did not exist until October 2015 and had no apparent connection to the transaction. Wonderful Cherries, LLC, was created in December 2015 and likewise had no proven connection to the $150,000 transfer.
In summary, Schoonover is liable for the $150,000 loan proceeds as a transfer beneficiary. Neither Wonderful Cherries, LLC, nor 405 E. Broadway, LLC, were shown to have been involved in these transactions. The judgment must be modified accordingly.
B. The Ysais Loan
Berbey obtained the $250,000 Ysais loan, secured by a deed of trust on the Washington property, in late October 2015. Schoonover admitted the money was transferred to his personal bank account, and that he "invested it into Cedar Mill Farms." In a March 2018 deposition, Berbey was asked why she borrowed the money. She answered, "It was not for my purpose ... [s]o I have no knowledge or independent knowledge of the money." We need not walk through the same analysis as provided above regarding the Emmersen loan. For similar reasons, the trial court had authority to hold Schoonover liable for the $250,000 as the "first transferee of the asset or the person for whose benefit the transfer was made." (Civ. Code, § 3439.08, subd. (b)(1)(A).)
Although unnecessary, we note the following evidence of wrongful intent. Berbey's false denial of owning real estate in her September 2015 deposition showed her intent to hide assets from Gold. Schoonover was found to have had knowledge of Gold's then pending RFO in the divorce case (a finding he does not dispute). In the trial court's statement of decision, it also cited testimony given by Berbey and Schoonover regarding the Ysais loan. During his debtor's examination in another case, Schoonover denied knowing the private lender or having ever heard his name. Berbey, when deposed in this case, also denied knowing the lender and claimed to have never met him. She testified it was Schoonover who knew the lender and handled the transaction.
The entity 405 E. Broadway, LLC, was formed on or about October 8, 2015. Berbey and Schoonover were the only members and managers of the company. On October 23, 2015, Berbey deeded the Washington property to the LLC. One week later, a deed conveying the property from 405 E. Broadway, LLC, back to Berbey was recorded. The deed of trust securing the Ysais loan was recorded on the same date. On November 6, 2015, which was the hearing date of Gold's RFO in the divorce case, a deed was recorded conveying the Washington property from Berbey back to 405 E. Broadway, LLC.
Schoonover's own testimony provided evidence of a plan to obtain a loan in the name of 405 E. Broadway, LLC, secured by what was then Berbey's separate property. By conveying the Washington property to the LLC and having the LLC borrow against it, Berbey would have created multiple layers of protection against Gold's collection efforts. At trial, Schoonover testified to negotiating the Ysais loan himself and claimed the lender "did not want to loan to the LLC." When sitting for a debtor's exam a few years earlier, Schoonover had denied knowing who owned the Washington property or being familiar with 405 E. Broadway, LLC.
Over the course of many years, Berbey and Schoonover demonstrated a willingness to lie whenever they perceived an advantage in doing so. The evidence of timing, concealment, and false testimony all support the trial court's finding of Berbey's culpable intent under Civil Code section 3439.04, subdivision (a)(1), and its rejection of Schoonover's "good faith transferee" defense.
The 405 E. Broadway, LLC, was not a transferee of the $250,000, nor was it shown to be a transfer beneficiary under Civil Code section 3439.08. However, Gold did argue a theory of conspiracy liability at trial. The trial court's statement of decision includes a general finding that appellants conspired to hinder, delay, or defraud Gold "in his attempts to collect the amounts owed by Ms. Berbey."
Despite often being labeled as a "cause of action" in pleadings and even appellate opinions, "[c]onspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration." (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511.) "By participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy." (Id. at p. 511.)
In Berger v. Varum, supra, 35 Cal.App.5th 1013, the plaintiff had pleaded two claims: "fraudulent transfer under [the UVTA] and conspiracy to defraud." (Id. at p. 1019, fn. omitted.) The appellate court held UVTA actions may include common law fraudulent transfer theories upon which an award of damages can be based. (Id. at pp. 1019-1020.) The plaintiff's conspiracy claim was deemed viable because a "'debtor and those who conspire with him to conceal his assets for the purpose of defrauding creditors are guilty of committing a tort and each is liable in damages.'" (Id. at pp. 1025-1026, quoting Taylor v. S &M Lamp Co. (1961) 190 Cal.App.2d 700, 706.) The necessary elements were pleaded by alleging the defendants (1) "planned to fraudulently transfer assets to hinder, delay, or defraud [the plaintiff]"; (2) "'agreed and intended that the fraudulent transfers be committed'"; (3) "in fact 'received assets without adequate consideration in furtherance of the fraud upon [the plaintiff]"; and (4) the plaintiff was harmed as a result of such conduct. (Berger, at p. 1026.)
Gold's briefing does not attempt to explain how or why conspiracy liability should attach to 405 E. Broadway, LLC, for the Ysais loan. At best, it would appear the company was part of a conspiracy that never came to fruition, i.e., to obtain a loan from the Ysais lenders to the LLC. But the loan was ultimately made to Berbey and secured by the Washington property while title to the property was in her name. None of the LLC's actions helped to accomplish this transaction; if anything, the LLC's temporary ownership of the property hindered Berbey's and Schoonover's efforts to obtain the loan. There is no evidence the LLC was a transferee of the loan proceeds or otherwise benefitted from them. Therefore, the record does not support joint and several liability against 405 E. Broadway, LLC, in connection with the Ysais loan.
Wonderful Cherries, LLC, did not exist until December 22, 2015. It was not involved in the Ysais loan transactions, which occurred in October 2015, and was not shown to be a transferee or beneficiary of the loan proceeds. The judgment must therefore be modified to impose liability for the Ysais loan transactions against Schoonover only.
C. The Lowers Loan
On November 30, 2015, the family court granted Gold's RFO in the divorce case. The order indicated Berbey would be liable to Gold for approximately $250,000. Two days later, Berbey executed a promissory note and third deed of trust on the Selma property to secure the $180,000 Lowers loan. The deed of trust was recorded on December 7, 2015. The next day, December 8, 2015, Berbey wired $169,000 to Schoonover's personal bank account. Then, on December 9, 2015, Berbey deeded the Selma property to herself and Schoonover as joint tenants, and together they recorded a homestead declaration for the property. Berbey later testified to having "no independent knowledge" of what happened to the loan proceeds despite the fact they were deposited into her personal bank account immediately prior to the $169,000 being transferred out of her account and directly into Schoonover's account.
The evidence of wrongful intent and lack of good faith is self-explanatory. The trial court was within its authority to hold Schoonover liable for $169,000 as the "first transferee of the asset or the person for whose benefit the transfer was made." (Civ. Code, § 3439.08, subd. (b)(1)(A).) But once again, Wonderful Cherries, LLC, did not exist when these transactions occurred. The Washington company, 405 E. Broadway, LLC, did exist but was not shown to have had any connection to the transactions. As such, there was no basis for joint and several liability for the $169,000 proceeds from the Lowers loan. The judgment shall be modified accordingly.
D. The PS Funding Loan
As discussed, the PS Funding loan was preceded by the recording of a fraudulent Acknowledgement of Satisfaction of Judgment (Judicial Council of California, Form EJ-100) concerning the lis pendens on the Selma property. The document was recorded on October 30, 2017. On November 17, 2017, record title to the Selma property was conveyed from Berbey and Wonderful Cherries, LLC, to Schoonover "as his sole and separate property." The deed was recorded on November 20, 2017. On the same date, Schoonover signed multiple loan documents containing false attestations about the Selma property, including a false denial regarding active and pending litigation relating to the property. The deed of trust securing the PS Funding loan was also recorded on this date.
The net proceeds from the PS Funding loan, $107,925.15, were disbursed to Schoonover. Because the trial court set aside the transfers of ownership of the Selma property, the PS Funding loan transactions were subject to "[a]voidance ... to the extent necessary to satisfy the creditor's [Gold's] claim" and "[a]ny other relief the circumstances may require." (Civ. Code, § 3439.07, subd. (a)(1) &(3)(C).) Schoonover and Wonderful Cherries, LLC, as transferees of the Selma property whose good faith defenses were rejected, are both subject to a money judgment. (Id., § 3439.08, subd. (b).) Alternatively, they are both subject to conspiracy liability. (See generally Applied Equipment Corp. v. Litton Saudi Arabia Ltd., supra, 7 Cal.4th at p. 511 [a coconspirator incurs tort liability co-equal with the immediate tortfeasors].)
The PS Funding loan scheme resembles the fact pattern in Nautilus, Inc. v. Yang, supra, 11 Cal.App.5th 33. There, a judgment creditor recorded an abstract of judgment against real property owned in joint tenancy by the debtor (Yang) and his brother. In their efforts to evade the creditor, Yang and his brother transferred title to their father. The father then obtained a reverse mortgage loan in his own name, secured by a deed of trust on the property. (Id. at pp. 36-39.) The creditor filed a UVTA action against multiple defendants, including the father. Although the father never stood in a debtor/creditor relationship with the plaintiff, the trial court entered a money judgment against the father "for conspiracy to fraudulently convey the [p]roperty." (Id. at p. 51.) We discuss Nautilus, Inc., only to illustrate how conspiracy liability has been similarly imposed against nondebtors in other UVTA cases. "Neither the propriety of the judgment against [the father] nor its amount" were at issue in the Nautilus, Inc., appeal. (Ibid.)
E. Sale of The Washington Property
The trial court's imposition of liability for the Washington property sale is somewhat difficult to reconcile with its statement of decision and the written judgment, neither of which expressly sets aside Berbey's prior transfer of title to 405 E. Broadway, LLC. However, the statement of decision includes that transfer among those found to have been made with intent to hinder, delay or defraud, and as evidence supporting its overall "finding in favor of Plaintiff." The statement of decision also devotes a paragraph to the improper conduct surrounding the removal of the lis pendens on the Washington property.
To briefly recap the timeline, Gold had obtained a nearly $900,000 judgment against Berbey by the end of 2018. The December 2018 addendum to the October 2018 judgment in the divorce case awarded Gold $613,000 in attorney's fees plus $100,000 in sanctions against Berbey. On February 26, 2019, a false Acknowledgment of Satisfaction of Judgment was recorded in the County of Grays Harbor, Washington. The following week, Schoonover executed a purchase and sale agreement with the eventual buyers of the Washington property in his capacity as manager of 405 E. Broadway, LLC.
The lis pendens on the Washington property gave notice of this UVTA action and, under ordinary circumstances, would have prevented the property from being sold. (See fn. 3, ante.) Gold's lawsuit was in fact active and pending in April 2019 when Schoonover and Berbey initiated legal proceedings in Washington without notice to Gold and filed declarations supporting their "motion to cancel the Lis Pendens." The trial court appears to have been appalled by Berbey's and Schoonover's actions in connection with the sale of Washington property, and rightfully so. The net sale proceeds of $168,148.38 were deposited into the bank account of 405 E. Broadway, LLC. Soon thereafter, Schoonover wrote checks to himself from the company account totaling $101,674.52.
"A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness." (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133.) Accordingly, the judgment may be interpreted as necessarily including the remedy of avoidance of Berbey's transfer of title from herself to 405 E. Broadway, LLC, "to the extent necessary to satisfy [Gold's] claim." (Civ. Code, § 3439.07, subd. (a)(1).) Schoonover and the LLC, as transferees and transfer beneficiaries whose good faith defenses were rejected, were appropriately held liable for $101,674.52. (See id., § 3439.08, subd. (b).) The trial court's acceptance of Gold's theory of conspiracy liability would also justify the money judgment for the same reasons discussed regarding the PS Funding loan. (See Nagel v. Westen, supra, 59 Cal.App.5th at p. 748 ["A creditor may also supplement the UVTA's remedies with any others available at law or in equity"].)
The record does not show Wonderful Cherries, LLC, was involved in these transactions or otherwise benefitted from them. The judgment shall be modified to reflect that Wonderful Cherries, LLC, is not liable for the $101,674.52 from the Washington property sale proceeds.
VI. Variances Between Pleading and Proof
Each cause of action in the operative complaint alleges damages "in an amount to be proven at trial, but no less than $265,753.65. The figure was based on the amount of Gold's judgment in the divorce case as of March 2016, when the original complaint was filed. The second amended complaint was filed in February 2018, at a point when the earlier judgment had been reversed on appeal but prior to the remand proceedings. By December 2018, further orders in the divorce case had made Berbey liable to Gold in an amount exceeding $893,000. Gold apparently never moved to amend the complaint to reflect those circumstances.
Because the $265,753 figure (rounded) was never updated in the pleadings, appellants argue the judgment should be limited to that amount. This argument is asserted without development in the opening brief, but in the reply brief appellants cite to Code of Civil Procedure section 425.10, subdivision (a)(2). The argument is misguided.
"Although a complaint 'shall contain ... [a] demand for judgment for the relief to which the pleader claims to be entitled,' including the amount of damages demanded (Code Civ. Proc., § 425.10, subd. (a)(2)), the specific dollar amount is necessary only when a default judgment is to be entered. The purpose of such a requirement is to ensure that the defendant is sufficiently aware of the consequences of not answering the complaint. [Citation.] However, 'in any other case, the court may grant the plaintiff any relief consistent with the case made by the complaint and embraced within the issue.' (Code Civ. Proc., § 580, subd. (a).)" (Furia v. Helm (2003) 111 Cal.App.4th 945, 957.)
Appellants also argue that conspiracy was not alleged in the operative complaint. But appellants do not contend-with regard to the amount of damages or the conspiracy theory-that they were prejudiced by any variance between the pleadings and Gold's proof at trial. We could disregard their arguments for that reason alone. "Variance between the allegation in a pleading and the proof shall not be deemed material, unless it has actually misled the adverse party to his or her prejudice in maintaining his or her action or defense upon the merits. If it appears that a party has been so misled, the court may order the pleading to be amended, upon such terms as may be just." (Code Civ. Proc., § 469.) "Where the variance is not material, ... the court may direct the fact to be found according to the evidence, or may order an immediate amendment." (Id., § 470, italics added.)
"An appellate court is not required to examine undeveloped claims, nor to make arguments for parties." (Paterno v. State of California (1999) 74 Cal.App.4th 68, 106.) That being said, the variance between Gold's pleading and proof is glaring. The operative complaint says nothing about the Ysais loan, the Lowers loan, the PS Funding loan, or the sale of the Washington property. The latter two transactions occurred after the second amended complaint was filed. Gold should have moved to further amend the pleadings, either when the relevant facts were discovered or at trial to conform to proof. (See Garcia v. Roberts (2009) 173 Cal.App.4th 900, 909 ["amendments at trial to conform to proof, 'if not prejudicial, are favored since their purpose is to do justice and avoid further useless litigation'"].) Nevertheless, it cannot be said appellants were prejudiced.
Evidence relevant to the loans was obtained through discovery, including the depositions of Berbey and Schoonover. Gold's trial brief addressed all loans and loan transfers, the sale of the Washington property, and his theory of conspiracy liability. The trial brief also alleged financial injury in excess of $1 million. During opening statements, Gold's counsel made clear they were seeking recovery of the PS Funding loan proceeds and profits from the sale of the Washington property. Gold's conspiracy claim came up several times during trial. Although the parties debated whether the pleadings alleged conspiracy, appellants never argued they were prejudiced in defending against Gold's claims. Appellants objected to evidence regarding the Washington property sale on relevance grounds, but there was no allegation of prejudice.
"Where a case is fully and fairly tried, where all relevant issues are fully developed, and where both sides have a full and fair opportunity to present all relevant evidence on the pertinent issues[,] a cause will not be reversed simply because the pleadings fail to fully disclose all of the related issues." (Crown Products Co. v. California Food Products Corp. (1947) 77 Cal.App.2d 543, 550; accord, Franz v. Board of Medical Quality Assurance (1982) 31 Cal.3d 124, 143-144; Hayes v. Richfield Oil Corp. (1952) 38 Cal.2d 375, 382.) In short, "if the proof is presented and the issue clearly tendered, the failure formally to amend the pleading is immaterial." (Pierce v. Pacific Gas & Electric Co. (1985) 166 Cal.App.3d 68, 81.) The necessary requirements were met in this case.
Moreover, "[n]o judgment shall be set aside . . ., in any cause, ... for any error as to any matter of pleading, or for any error as to any matter of procedure, unless, after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice." (Cal. Const., art. VI, § 13.) There is no miscarriage of justice in affirming the judgment subject to the required modifications.
DISPOSITION
The matter is remanded to the trial court for modification of the judgment as to joint and several liability consistent with this opinion. Such modification will require apportionment of damages and recalculation of all interest due thereupon based on each defendant's respective liability. In all other respects, the judgment is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
WE CONCUR: SMITH, J., DE SANTOS, J.