Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC364405, Gregory Alarcon, Judge.
Anna Davitian for Defendants and Appellants.
Law Offices of Hemar Rousso & Heald, Jeannine Del Monte Kowal for Plaintiff and Respondent.
MOSK, J.
INTRODUCTION
Plaintiff Dr. Harris Newmark III, a Corporation, brought an action against defendants Kirkor Kirkorian, M.D. (Kirkorian) and his wife Snezana Kirkorian, aka Snezana Pavlovic, for fraudulent conveyance based on a transfer from Kirkorian to his wife of his interest in their residence property (real property). The fraudulent conveyance claim pertains to 2002 and 2004 judgments obtained by plaintiff against Kirkorian. The trial court struck the allegation as to the 2002 judgment as being untimely, but after trial, granted plaintiff’s motion to amend to conform to proof so as to permit plaintiff to replead the 2002 judgment. Defendants assert that the trial court had no power to allow the amendment and that in any event there was not sufficient evidence to support the trial court’s conclusion that plaintiff brought his fraudulent transfer case within the required time. We hold that the trial court had the discretion to permit the amendment and did not abuse that discretion. We also hold there was substantial evidence to support the trial court’s conclusion that the statute of limitations was not a bar in this case.
BACKGROUND
Plaintiff alleged in its January 8, 2007, complaint that on April 25, 2002, it obtained a judgment against Kirkorian, and on February 10, 2004, he obtained another judgment against Kirkorian. On January 7, 2000, Kirkorian fraudulently transferred real property to his wife, Snezana, without consideration and rendering him insolvent. Plaintiff sought to void the conveyance as a fraudulent conveyance.
Defendants demurred, inter alia, on the ground that the fraudulent conveyance claim was barred by Civil Code section 3439.09, subdivision (a), which provides for a four year limitations period. Defendants argued that the complaint was filed seven years after the transfer of the property and over four years from the first judgment entered against defendant Kirkorian. The trial court overruled the demurrer, but on its own motion struck the paragraph referring to the 2002 judgment because that judgment could not support a fraudulent conveyance claim, as it was entered more than four years prior to the commencement of the fraudulent conveyance action.
At the hearing, the attorney for the defendants stated, “I just want to clarify one thing, the motion to strike. The court on its own motion strikes paragraph six of the complaint. That represents the 2002 judgment. That’s without leave to amend or to add any other allegations.” The trial court responded, “Well, it’s things like that that concern me a little as to what they’re going to argue.”
At trial, the following evidence was submitted: Plaintiff, a radiologist, was employed by Kirkorian’s imaging company and Kirkorian; disputes arose as to salary and other monies owed to plaintiff; in 1997 Kirkorian filed for bankruptcy; the bankruptcy judge ordered the real property in question, which was held by defendants as community property, to be sold; it was sold to defendant; immediately thereafter Kirkorian became indebted to plaintiff for employment and independent contractor services that became the subject of the 2002 and 2004 judgments; the 2002 judgment was based on an order of the Labor Commissioner finding Kirkorian liable for past wages; the independent contractor claims were the subject of the 2004 judgment; in 2000 Kirkorian transferred his interest in the real property to his wife for no consideration.
Plaintiff testified in this case that he was unaware that Kirkorian had transferred property to his wife and that searches did not disclose that fact. Plaintiff first learned towards the end of 2006, that Kirkorian had been an owner of the real property. The complaint was filed in January, 2007.
At the end of trial it was disclosed that the 2004 default judgment had recently been set aside. Plaintiff then moved for leave to amend the complaint to conform to proof at trial in order to allow the stricken paragraph concerning the 2002 judgment to be added to the complaint because of evidence that Kirkorian concealed his interest in the real property and that it was not unreasonable for plaintiff to have not discovered the fraudulent conveyance until over six years after the transfer.
The trial court found that the transfer of the real property was fraudulent and granted plaintiff’s motion for leave to amend the complaint to conform to proof. The trial court concluded that the transfer of the real property was void as to the 2002 and 2004 judgments and that the property is the community property of defendants. Defendants objected to the judgment to the extent it allowed the amendment to the complaint to add the 2002 judgment and also to the reference to the 2004 judgment, which had been set aside. Plaintiff moved to again amend the complaint by adding the language, “Plaintiff did not reasonably discover the fraudulent transfer described above until no sooner than one year before the filing of the action.” The trial court granted plaintiff’s motion to amend but struck the reference to the 2004 judgment.
The judgment was entered, and defendants filed a timely notice of appeal.
DISCUSSION
Defendants contend that the trial court had no power to allow the amendments to conform to proof and that the recorded transfer of the property provided constructive notice to plaintiff so that he could not establish belated discovery of the transfer to delay accrual of the cause of action for statute of limitations purposes.
A. Standard of Review
“[T]he allowance of amendments to conform to the proof rests largely in the discretion of the trial court and its determination will not be disturbed on appeal unless it clearly appears that such discretion has been abused.” (Trafton v. Youngblood (1968) 69 Cal.2d 17, 31.) Whether such an amendment is legally permissible is a question of law we review de novo.
“‘Resolution of the statute of limitations issue is normally a question of fact.’ [Citation.] More specifically, as to accrual, ‘once properly pleaded, belated discovery is a question of fact.’ [Citation.] As our state’s high court has observed: ‘There are no hard and fast rules for determining what facts or circumstances will compel inquiry by the injured party and render him chargeable with knowledge. [Citation.] It is a question for the trier of fact.’ [Citation.] ‘However, whenever reasonable minds can draw only one conclusion from the evidence, the question becomes one of law.’ [Citation.]” (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1320.)
We review questions of fact to determine if they are supported by substantial evidence. Thus, we review the record to determine if there is any evidence, contradicted or uncontradicted to support the trial court’s findings. When the evidence conflicts or is capable of conflicting inferences, we do not substitute our views for those of the finder of fact. We do not reweigh the evidence, reappraise the credibility of witnesses or resolve factual conflicts differently than the trial courts findings, but only determine if there is substantial evidence to support the findings. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429; Eidsmore v. RBB, Inc. (1994) 25 Cal.App.4th 189, 195.) Questions of law are reviewed de novo. (Amdahl Corp. v. County of Santa Clara (2004) 116 Cal.App.4th 604, 611.)
B. Applicable Law
Civil Code section 3439.04 provides in part as follows:
“a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows:
(1) With actual intent to hinder, delay, or defraud any creditor of the debtor.
(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either:
(A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.
(B) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due. (b) In determining actual intent under paragraph (1) of subdivision (a), consideration may be given, among other factors, to any or all of the following: (1) Whether the transfer or obligation was to an insider.
(2) Whether the debtor retained possession or control of the property transferred after the transfer.
(3) Whether the transfer or obligation was disclosed or concealed.
(4) Whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit. [¶]... [¶]
(8) Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.
(9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.
(10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred....”
The statute of limitations that applies to fraudulent conveyance cases is set forth in Civil Code section 3439.09, which states as follows:
“A cause of action with respect to a fraudulent transfer or obligation under this chapter is extinguished unless action is brought pursuant to subdivision (a) of Section 3439.07 or levy made as provided in subdivision (b) or (c) of Section 3439.07:
(a) Under paragraph (1) of subdivision (a) of Section 3439.04, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant.
(b) Under paragraph (2) of subdivision (a) of Section 3439.04 or Section 3439.05, within four years after the transfer was made or the obligation was incurred.
(c) Notwithstanding any other provision of law, a cause of action with respect to a fraudulent 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.”
In Cortez v. Vogt (1997) 52 Cal.App.4th 917 (Cortez), the court held that the statute of limitations is tolled during the period when plaintiff’s lawsuit to establish the underlying debt is pending. The court said that the fraudulent conveyance act “permits, but does not require, a creditor to bring suit to set aside a fraudulent transfer before the claim has matured.” (Id. at p. 931.) “[T]he fact that the creditor may pursue the unmatured claim to judgment, followed by a suit to set aside the fraudulent transfer, suggests it would be inappropriate to begin the running of the limitations period for the fraudulent transfer action before the creditor choosing to pursue a judgment actually obtains the judgment.” (Ibid.) “If the limitations period on the fraudulent transfer action begins to run before final judgment in the underlying creditor action, the creditor may be required to file and prosecute both actions to protect against the expiration of the limitations period; if the creditor action is not successful the fraudulent transfer action will be dismissed or severed and will have resulted in needless effort and expense to both parties and the court.” (Id. at p. 932.)
Thus, the court in Cortez, supra, 52 Cal.App.4th 917, concluded that “where an alleged fraudulent transfer occurs while an action seeking to establish the underlying liability is pending, and where a judgment establishing the liability later becomes final, we construe the four-year limitation period... to accommodate a tolling until the underlying liability becomes fixed by a final judgment.” (Id. at pp. 920, 937; see also Macedo v. Bosio (2001) 86 Cal.App.4th 1044.)
That the transfer in question preceded any action to establish the underlying liability does not matter under the reasoning of Cortez, supra, 52 Cal.App.4th 917. The case Cortez relies upon, Lind v. O.N. Johnson Co. (Minn. 1938) 282 N.W. 661, involved a fraudulent transfer that occurred before the underlying action was filed.
C. Amendment
Defendants assert that once the trial court struck the reference to the 2002 judgment, plaintiff’s only recourse was to seek reconsideration or to seek appellate review. Defendants cite no authority to support their position. Code of Civil Procedure section 581, subdivision (f)(4) provides that a motion to strike a portion of the complaint can be made with leave to amend. Presumably, this contemplates that it can be made without leave to amend. Here, the trial court, although not referring to with leave to amend in its order, declined defendant’s request to make its order to strike without leave to amend. Thus, the trial court had the power to permit plaintiff to amend the complaint according to proof to add allegations of the 2002 judgment and his delayed discovery of the fraudulent conveyance.
Code of Civil Procedure section 576 permits the trial court to allow the amendment of any pleading “at any time before or after commencement of trial.” As noted, the trial court has discretion to allow an amendment to conform to the proof. (Trafton v. Youngblood, supra, 69 Cal.2d at p. 31.) “Such amendments have been allowed with great liberality....” (Id.) It is true, as defendants argue, that “‘amendments of pleadings to conform to the proofs should not be allowed when they raise new issues not included in the original pleadings and upon which the adverse party had no opportunity to defend.’” (Id.)
Defendants assert that they were prejudiced by the amendment because they were unable to prepare an adequate defense as to the 2002 judgment. They state that after the allegations of the 2002 judgment was stricken, there was no statute of limitations issue. The record shows that at trial, there was evidence of the 2002 judgment and of plaintiff’s knowledge or lack thereof of the fraudulent transfer. Defendants do not state what evidence they could have produced if the 2002 judgment had not been stricken. Defendants were apprised of the fraudulent conveyance claim. And during the trial, the parties introduced evidence regarding the limitations issue. Indeed, defendants cross examined plaintiff as to the 2002 judgment and as to whether plaintiff knew or should have known of the transfer of the real property after the 2002 judgment. “[I]t is irrelevant that new legal theories are introduced as long as the proposed amendments ‘relate to the same general set of facts.’ [Citation.]” (Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048; see also Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 760-761.) Here the amendment related to the same general set of facts.
Misleading or prejudicing a party by a proposed amendment according to proof are factors to consider; they are just that—factors to consider—but within the broad discretion of the trial court. (See Wegner, et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2008) §§ 12:392-12:393, pp. 12-78 to 12-79.) As noted, defendants do not specify precisely what they would have or could have done that they did not do had they known of the existence of the allegations that were the subject of the amendment. They were certainly on notice that the allegation was not stricken with prejudice and that plaintiff introduced evidence about the 2002 judgment and his lack of knowledge of the transfer. Accordingly, the trial court did not abuse its discretion in permitting the amendment.
D. Substantial Evidence
There was substantial evidence that plaintiff did not have sufficient notice of the fraudulent transfer until shortly before he filed this action. Plaintiff testified he had an attorney who tried to collect on the judgments, and there was a debtor examination of Kirkorian in March of 2003. There was no disclosure of the transfer of the real property at that time. Plaintiff said his attorney told him there was nothing more he could do to collect the judgments. Plaintiff learned from a new attorney in November of 2006 that Kirkorian had been the owner of the real property in question. Kirkorian testified his wife owned the real property. The trial court found that “the [real property] was purposefully hidden from the Plaintiff with the intent to hinder Plaintiff’s ability to recover his judgments.” This finding, in effect, supports the proposition that plaintiff did not have notice of, and could not reasonably ascertain, the transfer at a time earlier than when he did discover the transfer. Thus, the cause of action did not accrue until within three months before plaintiff filed the complaint. There is substantial evidence to support this conclusion.
Defendants contend that the recording of the deed provided sufficient notice to plaintiff to start the accrual of the cause of action by the time of the 2002 judgment. That plaintiff had constructive notice of the transfer does not necessarily impute notice to him or inquiry notice to him for statute of limitations purposes. “Under a long line of cases, the fact that the victim had constructive notice of the truth from public records is no defense to fraud. The existence of such public records may be relevant to whether the victim’s reliance was justifiable, but it is not, by itself, conclusive. [Citations.]” (Bishop Creek Lodge v. Scira (1996) 46 Cal.App.4th 1721, 1734; see Tarke v. Bingham (1898) 123 Cal. 163, 166 [mortgage containing mistake did not require finding that purchaser had discovered mistake for purposes of the statute of limitations. “[T]hough means of information were open to the plaintiff, it does not appear that there was any duty devolving upon him to make use of them”].) Substantial evidence supports the trial court’s findings.
DISPOSITION
The judgment is affirmed. Plaintiff is awarded his costs.
We concur: ARMSTRONG, Acting P. J., KRIEGLER, J.