Opinion
A149407
05-08-2018
CLAUDIA MCHENRY, Plaintiff and Appellant, v. RICHARD A. LUKASKO, et al., Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Sonoma County Super. Ct. No. SCV-252574)
In this lawsuit alleging the fraudulent transfer of real property, plaintiff Claudia McHenry (Plaintiff) appeals from the judgment issued after a bench trial in favor of defendants Richard A. Lukasko and Alma Lukasko (Defendants). In its statement of decision, the trial court concluded Plaintiff's claims were barred by the applicable statutes of limitations. We affirm.
For convenience, we will refer to Defendants individually by their first names. No disrespect is intended.
BACKGROUND
We recite only those facts relevant to our resolution of this appeal.
Plaintiff and Richard were divorced in 1997 pursuant to a marital settlement agreement. Richard subsequently married Alma. In June 2002, during postjudgment proceedings between Plaintiff and Richard, Richard declared in a court filing that his only asset was certain real property located in Sonoma County (the Property). In February 2003, Plaintiff obtained an award of approximately $240,000 against Richard for a violation of their marital settlement agreement.
Less than two weeks before the hearing which resulted in Plaintiff's February 2003 award, Defendants executed a grant deed transferring the Property to Alma's brother, Benjamin Wong (the Wong Deed). On the face of the Wong Deed was the handwritten notation, "GIFT." The Wong Deed was recorded the same day.
In March 2003, Plaintiff recorded an abstract of judgment for her $240,000 award against Richard. The following month, Plaintiff's attorney at the time, Dennis O'Brien, wrote to two financial institutions which held mortgage liens on the Property. The letters referred to and enclosed the Wong Deed, and indicated that copies of the letters were sent to Plaintiff. At the bench trial in the instant litigation, Plaintiff did not deny receiving copies of these letters, but testified she did not recall seeing them and she did not always read her mail. O'Brien testified that in 2003, he "was exploring" whether the Wong Deed was "a fraudulent transfer." When asked whether anything prevented him from filing a lawsuit for fraudulent transfer at that time, he responded, "Let's just say that what I did or did not do would be the result of communication between myself and my client."
The letters asked the banks whether, pursuant to their deeds of trust, they had provided advance consent to the transfer of the Property to Wong and whether they were requiring immediate payment in full on the loans. Apparently, the banks never responded.
Title to the Property was transferred again in the following years. Defendants divorced in the fall of 2003 and their September 2003 marital settlement agreement distributed the Property to Alma. In October 2003, Wong executed a grant deed transferring the Property to Alma. In December 2007, after Defendants married each other for the second time, Alma transferred title to the Lukasko Family Trust.
In 2012, Plaintiff filed the instant lawsuit against Defendants. She asserts two causes of action: violation of the Uniform Fraudulent Transfer Act (UFTA; Civ. Code §§ 3439 et seq.) and cancellation (§ 3412). Following a bench trial, the trial court issued a lengthy statement of decision finding, inter alia, Plaintiff's causes of action accrued in April 2003, when Plaintiff had knowledge (or imputed knowledge) of the Wong Deed and reason to suspect the transfer was fraudulent; Plaintiff's 2012 lawsuit was therefore barred by the applicable four-year statutes of limitations; and Plaintiff was not entitled to equitable relief from the statutes of limitations. Judgment against Plaintiff issued accordingly.
All undesignated section references are to the Civil Code.
"A transfer made or obligation incurred by a debtor is voidable as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation." (§ 3439.05, subd. (a).) Effective January 1, 2016, the UFTA was renamed the Uniform Voidable Transactions Act. (Stats. 2015, ch. 44, § 2-3.)
"A written instrument, in respect to which there is a reasonable apprehension that if left outstanding it may cause serious injury to a person against whom it is void or voidable, may, upon his application, be so adjudged, and ordered to be delivered up or canceled." (§ 3412.)
DISCUSSION
I. Summary Judgment Orders
Plaintiff first argues certain factual findings in the statement of decision improperly conflict with findings contained in two previous orders in this action—issued by a different bench officer—denying Defendants' motions for summary judgment based on the statute of limitations. We reject the challenge.
Plaintiff first argues the summary judgment orders constitute law of the case. " 'The law of the case doctrine states that when, in deciding an appeal, an appellate court "states in its opinion a principle or rule of law necessary to the decision, that principle or rule becomes the law of the case and must be adhered to throughout its subsequent progress, both in the lower court and upon subsequent appeal." ' " (Cerna v. City of Oakland (2008) 161 Cal.App.4th 1340, 1354.) The trial court's summary judgment orders cannot be law of the case because "the doctrine of law of the case applies only to appellate court decisions." (AT&T Communications, Inc. v. Superior Court (1994) 21 Cal.App.4th 1673, 1680.) Defendants sought writ relief from the summary judgment orders; in both writ proceedings, this court issued summary denials finding writ relief inappropriate. "A summary denial of a petition for writ of mandate is not a denial on the merits and does not become law of the case." (Bank of America, N.A. v. Superior Court (2013) 212 Cal.App.4th 1076, 1097.) Therefore, neither the summary judgment orders nor this court's orders denying writ relief are law of the case.
On our own motion, we take judicial notice of the records in these prior writ proceedings.
Plaintiff also cites authorities providing one trial court bench officer cannot vacate the decision of another bench officer. (E.g., People v. Saez (2015) 237 Cal.App.4th 1177, 1184 [" 'the power of one [trial court] judge to vacate an order made by another judge is limited' "].) The statement of decision issued after a bench trial did not vacate the orders denying summary judgment. "All that is needed in an order denying a motion for summary judgment or adjudication is (1) specification of one or more material facts in controversy and (2) specific reference to the conflicting evidence indicating that such triable issue exists. [Citations.] And, of course, an order denying the motion simply establishes the existence of a triable issue of fact. It does not decide the issue." (Transport Ins. Co. v. TIG Ins. Co. (2012) 202 Cal.App.4th 984, 1009.) Plaintiff's authorities are therefore inapposite.
II. Statutes of Limitations
With one exception discussed below in Part III, Plaintiff does not dispute the trial court's finding that the applicable statutes of limitations were four years (see § 3439.09; Code Civ. Proc., § 343). Her primary contentions are the trial court erred in finding (1) the causes of action for the Wong Deed transfer accrued in April 2003, when Plaintiff discovered or had reason to discover the Wong Deed was fraudulent; (2) Plaintiff was not entitled to equitable tolling; and (3) Plaintiff was not entitled to equitable estoppel.
In the trial court, Plaintiff also contended the subsequent transfers of the Property extended the statutes of limitations. The statement of decision rejected this argument, noting that Richard did not hold title to the Property through the end of the limitations period. To the extent Plaintiff addresses the subsequent transfers in her appellate briefs, her only argument is that the statement of decision conflicted with the orders denying summary judgment. As we have already rejected Plaintiff's only argument on this issue, we need not address it further.
All three of these issues are questions of fact as to which Plaintiff had the burden of proof. (Cleveland v. Internet Specialties West, Inc. (2009) 171 Cal.App.4th 24, 31 ["It is plaintiff's burden to show he was not negligent in failing to discover his injury sooner, and whether he exercised reasonable diligence ' " 'is a question of fact for the court or jury to decide.' " ' "]; Hopkins v. Kedzierski (2014) 225 Cal.App.4th 736, 745 (Hopkins) ["equitable estoppel and equitable tolling present questions of fact"]; Aguilera v. Heiman (2009) 174 Cal.App.4th 590, 598 ["[e]quitable tolling requires that three essential elements be satisfied by the party seeking the tolling"]; Ashou v. Liberty Mutual Fire Ins. Co. (2006) 138 Cal.App.4th 748, 766 (Ashou) [" ' " '[f]our elements must ordinarily be proved to establish an equitable estoppel' " ' "].)
" 'In the case where the trier of fact has expressly or implicitly concluded that the party with the burden of proof did not carry the burden and that party appeals, it is misleading to characterize the failure-of-proof issue as whether substantial evidence supports the judgment. . . . [¶] Thus, where the issue on appeal turns on a failure of proof at trial, the question for a reviewing court becomes whether the evidence compels a finding in favor of the appellant as a matter of law. [Citations.] Specifically, the question becomes whether the appellant's evidence was (1) "uncontradicted and unimpeached" and (2) "of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding." [Citation.]' [Citation.] The appellate court cannot substitute its factual determinations for those of the trial court; it must view all factual matters most favorably to the prevailing party and in support of the judgment. [Citation.] ' "All conflicts, therefore, must be resolved in favor of the respondent." ' " (Dreyer's Grand Ice Cream, Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 838 (Dreyer's).)
A. Accrual of Plaintiff's Causes of Action
" '[S]tatutes of limitation do not begin to run until a cause of action accrues.' [Citation.] '[A] cause of action accrues at "the time when the cause of action is complete with all of its elements." ' [Citation.] 'An important exception to the general rule of accrual is the "discovery rule," which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action. [Citations.] [¶] A plaintiff has reason to discover a cause of action when he or she "has reason at least to suspect a factual basis for its elements." [Citations.]' [Citation.] A potential plaintiff 'discovers the cause of action when he at least suspects a factual basis, as opposed to a legal theory, for its elements, even if he lacks knowledge thereof—when, simply put, he at least "suspects . . . that someone has done something wrong" to him [citation], "wrong" being used, not in any technical sense, but rather in accordance with its "lay understanding." ' " (Rosas v. BASF Corporation (2015) 236 Cal.App.4th 1378, 1389.)
The statement of decision found that "Plaintiff had actual or imputed [through her then-attorney] knowledge of the [Wong Deed] on or about April 8, 2003." The statement of decision further found "that the 'Gift' transfer, by [Defendants] of [the Property] to a relative of [Alma], would have caused a reasonable person in Plaintiff's position to suspect that [Defendants] had done something 'wrong' that might adversely affect her judgment lien against [the Property]." The trial court concluded the applicable 4-year statutes of limitations thus expired in April 2007.
The trial court also found Plaintiff's UFTA claim was barred by the 7-year statute of repose. (§ 3439.09, subd. (c) ["Notwithstanding any other provision of law, a cause of action under this chapter with respect to a transfer or obligation is extinguished if no action is brought or levy made within seven years after the transfer was made or the obligation was incurred."].) The parties dispute whether equitable tolling and equitable estoppel apply to statutes of repose. We need not decide the issue because we affirm the trial court's findings that the 4-year statutes of limitations bar the claims and (as discussed post) that Plaintiff has not established an entitlement to either doctrine.
Plaintiff argues neither she nor her attorney could have suspected the Wong Deed was a fraudulent transfer unless the financial institutions holding mortgages on the Property answered the letters from Plaintiff's counsel. (See fn. 3, ante.) We disagree. The trial court's findings are supported by the evidence. That Plaintiff's counsel did not learn whether the banks had provided advance consent for the transfer of the Property to Wong or whether they were requiring immediate payment in full on the loans does not "compel[] a finding in favor of the appellant as a matter of law." (Dreyer's, supra, 218 Cal.App.4th at p. 838.)
Plaintiff does not challenge the trial court's finding imputing to her "O'Brien's [her then-attorney] knowledge of [the Wong Deed] and his belief it was fraudulent, as well as everything that a reasonable investigation would have disclosed . . . ."
B. Equitable Tolling
"[E]quitable tolling may apply to toll the statute of limitations on a claim during the period in which a plaintiff pursues another remedy for the harm that the plaintiff suffered." (Hopkins, supra, 225 Cal.App.4th at p. 746.) "[T]o prove the applicability of the equitable tolling doctrine, a party must establish 'three elements: "timely notice, and lack of prejudice, to the defendant, and reasonable and good faith conduct on the part of the plaintiff." ' " (Id. at p. 747.) Courts have also applied equitable tolling when " 'the plaintiff uses reasonable care and diligence in attempting to learn the facts that would disclose the defendant's fraud or other misconduct.' [Citation.] . . . . 'To establish that equitable tolling applies, a plaintiff must prove the following elements: fraudulent conduct by the defendant resulting in concealment of the operative facts, failure of the plaintiff to discover the operative facts that are the basis of its cause of action within the limitations period, and due diligence by the plaintiff until discovery of those facts.' " (Sagehorn v. Engle (2006) 141 Cal.App.4th 452, 460-461, fn. omitted.)
The statement of decision rejected Plaintiff's equitable tolling claim, finding, inter alia, "Plaintiff failed to establish that she 'use[d] reasonable care and diligence in attempting to learn the facts that would disclose the defendant's fraud or other misconduct' . . . ." Plaintiff points to an email sent from Alma to the adult children of Plaintiff and Richard in February 2007 (two months before the 4-year limitations period expired), in which Alma states Plaintiff's recorded abstract of judgment has prevented Defendants from refinancing their mortgages on the Property; in this email, Alma refers to the Property as "our [Defendants'] property." One of the children forwarded this email to Plaintiff. Plaintiff argues this email constitutes fraudulent concealment of the fact that Richard no longer held title to the Property. Even assuming (without deciding) that is the case, the evidence has no bearing on the trial court's finding that Plaintiff did not establish she exercised reasonable diligence—one of the elements of equitable tolling—and therefore does not "compel[] a finding in favor of the appellant as a matter of law." (Dreyer's, supra, 218 Cal.App.4th at p. 838.)
C. Equitable Estoppel
" ' " 'Four elements must ordinarily be proved to establish an equitable estoppel: (1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had the right to believe that it was so intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and, (4) he must rely upon the conduct to his injury.' " ' " (Ashou, supra, 138 Cal.App.4th at pp. 766-767.)
The statement of decision describes Plaintiff's argument that Alma's February 2007 email, described above, " 'lulled [Plaintiff] into a false sense of security.' " The trial court found Plaintiff failed to establish that Alma intended for Plaintiff to rely on her email (which was not sent to Plaintiff). The trial court also found Plaintiff failed to prove she relied on the email to her injury: "Plaintiff testified that she did not change her position based on the email. Plaintiff's position remained unchanged through the end of the limitations period several weeks later and for many years thereafter." To the extent Plaintiff continues to rely on Alma's 2007 email on appeal, she fails to demonstrate any error in the trial court's findings.
Plaintiff also points to correspondence from Richard or his counsel to Plaintiff's counsel in 2011. " ' " 'Equitable estoppel . . . addresses . . . the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his conduct has induced another into forbearing suit within the applicable limitations period.' " ' " (Hopkins, supra, 225 Cal.App.4th at p. 755, fn. 14, italics added.) Conduct taking place after the limitations period expired cannot have induced Plaintiff into forbearing suit during the limitations period. (See Turner & Banke, Cal. Practice Guide: Civil Procedure Before Trial, Statutes of Limitations (The Rutter Group 2017) ¶ 7:43 ["The conduct that gives rise to the estoppel must occur before expiration of the statute of limitations."].)
Finally, Plaintiff points to Alma's failure to file a quiet title action to remove the cloud on title created by Plaintiff's recorded abstract. Plaintiff points to no evidence that Alma intended Plaintiff to rely on her failure to file a quiet title action to delay the instant lawsuit, or that Plaintiff did so rely. The bare fact that Alma has not filed such an action does not "compel[] a finding in favor of the appellant as a matter of law." (Dreyer's, supra, 218 Cal.App.4th at p. 838.)
III. Additional Arguments
Plaintiff argues the Wong Deed was void or voidable. Her brief asserts, "there is no statute of limitations because time does not validate a void act." Plaintiff cites no authority for this proposition and has therefore forfeited the argument. (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.) Even if it were not forfeited, we would reject it. As explained at length in Walters v. Boosinger (2016) 2 Cal.App.5th 421, "[c]ourts have . . . concluded that an action to cancel a deed on the ground that the deed is void is subject to a statute of limitations." (Id. at p. 428; see also id. at pp. 428-433.) Plaintiff's arguments regarding the voidness or voidability of the Wong Deed are thus irrelevant, as the statutes of limitations bar her claims.
Plaintiff argues (1) Defendants' community is liable for Richard's debt to Plaintiff, and (2) when Defendants divorced in 2003, the marital settlement agreement's division of property was unfair. We express no opinion on these issues, neither of which is raised by the action before us.
Plaintiff contends she has standing to assert the cancellation claim. We need not decide the issue because, assuming she has standing, the claim is barred by the statute of limitations.
Finally, Plaintiff argues that if her claims are barred by the statutes of limitations, and Alma's quiet title claim is also barred by the statute of limitations (an issue on which we express no opinion), then "there is effectively no resolution" to the parties' dispute. As Plaintiff concedes, this "is not an issue on this appeal," and we decline to address it.
DISPOSITION
The judgment is affirmed. Defendants shall recover their costs on appeal.
/s/_________
SIMONS, J. We concur. /s/_________
JONES, P.J. /s/_________
BRUINIERS, J.