Opinion
A129466
08-24-2011
WILLIAM PASTINA, Plaintiff and Appellant, v. AUTOMATED VENDING SERVICES, INC., Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Alameda County Super. Ct. No. HG07362118)
Plaintiff William Pastina appeals from the judgment entered after a bench trial that he take nothing on his complaint against defendant Automated Vending Services, Inc. (Automated). We affirm.
BACKGROUND
This litigation commenced on December 19, 2007, when plaintiff filed his "Complaint to Avoid Fraudulent Transfer; Complaint for Damages Resulting from Fraudulent Transfer." Plaintiff alleged that he had obtained a judgment for $446,924.66 against Wayne Bauer and Coffee Vendors, Inc. (Coffee Vendors).
The target of the complaint was the sale of Coffee Vendors to Automated following procedures for bulk sales governed by sections 6101-6011 of the California Uniform Commercial Code. Plaintiff alleged that "On or about some time within the past two years, Judgment Debtor and Defendant AUTOMATED . . . entered into an agreement whereby Judgment Debtor transferred all assets of COFFEE VENDORS . . . to AUTOMATED," and that this transfer was effected in violation of the Uniform Fraudulent Transfer Act (Civ. Code, §§ 3439-3439.12). Plaintiff further alleged that the transfer was invalid because: (1) it was made to an "insider"; (2) it was concealed from plaintiff with the actual intent to defraud him; (3) Coffee Vendors "did not receive reasonably equivalent consideration" (see Civ. Code, § 3439.04, subds. (b)(1), (a)(1), (b)(3), & (a)(2)); and (4) Automated "failed and refused to follow California's bulk transfer law as set forth in the Commercial Code."
Plaintiff was represented by counsel when the complaint was filed. However, by the time the cause came on for trial, plaintiff was representing himself. He continues to represent himself on this appeal.
A bench trial was held on June 28, 2010, before the Honorable Marshall Whitley. In discussions as to the scope of the case to be heard, the court ruled that no evidence as to the validity of the bulk sale would be admitted because the relevant statute of limitations (Cal. U. Com. Code, § 6110) had run. The issues were further limited when plaintiff agreed that he was contesting just the intent to defraud and equivalent consideration grounds under the Uniform Fraudulent Transfer Act.
Only two witnesses testified—Albert Albiani, called by plaintiff, and Tony Moran for Automated. Their testimony, together with exhibits that are properly before us, support the following recitals:
Wayne Bauer had owned and operated Coffee Vendors for a number of years. About 2000, he became receptive to selling the firm. To that end, he engaged Moran, a business broker arranging mergers and acquisitions, and specializing in "selling vendor routes." By the time Albiani, Automated's President, contacted Moran in 2004, Bauer's business situation was deteriorating, and Coffee Vendors was losing accounts.
Bauer agreed to sell Coffee Vendors to Automated for $200,000. In October 2004, a written instrument of sale was executed. Albiani began managing Coffee Vendors pending close of the escrow, and Bauer left the area. In January 2005, Automated filed a "Notice of Bulk Sale" advising that the sale "will be consummated on or after February 8, 2005." After Automated investigated and discovered the sorry state of Coffee Vendor's existing business, the sale agreement was amended to reduce the sale price to $59,000. Automated also discovered that Coffee Vendors had numerous creditors, as well as unpaid tax liabilities. The entire $59,000 went to paying off taxes and creditors. In other words, Bauer got nothing. The sale was evidenced by a "Bill of Sale" executed by Bauer and Albiani.
Moran further testified that he acted as a dual agent, representing both Automated and Coffee Vendors. Moran gave his opinion that the dealings between Automated and Coffee Vendors were at arm's length, and not fraudulent. Bauer never told him that he was willing to sell the assets of Coffee Vendors at less than fair market value. Albiani's opinion was the same. Albiani testified that neither he nor Automated had had dealings with either Bauer or Coffee Vendors prior to the sale. Albiani testified that $59,000 was a fair price for what was left of Coffee Vendors.
When Moran finished testifying, the cause was submitted. Closing statements were deemed to be in the trial briefs (which are not in the record on appeal). The court then ruled that plaintiff's "prayers for relief . . . voiding the transfer" and damages were denied. Judgment would be entered for Automated, the court stating that "the reason for the decision is that there's insufficient evidence to support a decision in favor of plaintiff[]."
DISCUSSION
Plaintiff frames the issues on appeal as a number of "Questions of Law." The first two deal with the bulk sale, and the remainder with whether he established that the Automated-Coffee Vendors transaction was a fraudulent transfer.
Plaintiff first argues that Albiani did not sign the "Notice of Bulk Sale," "nor did [he] authorize anyone to sign for him." He then argues that if we find for him on this issue, "then the . . . argument as to the statute of limitation is . . . moot." This is a reversal of the proper analytical sequence. If the action attacking the validity of the bulk sale is time-barred, then it is the details of the notice which become moot.
The governing statute provides in pertinent part:
"(a) Except as provided in subdivision (b), an action under this division against a buyer . . . shall be commenced within one year after the date of the bulk sale.
"(b) If the buyer . . . conceals the fact that the sale has occurred, the limitation is tolled and an action under this division may be commenced within the earlier of the following: [¶] (1) One year after the person bringing the action discovers that the sale has occurred. [¶] (2) One year after the person bringing the action should have discovered that the sale has occurred, but no later than two years after the date of the bulk sale. Complete noncompliance with the requirements of this division does not of itself constitute concealment." (Cal. U. Com. Code, § 6110.)
Plaintiff did not testify, so we do not know when he learned of the sale. All we therefore can ascertain is that the sale occurred on or about August 30, 2005, the date the "Bill of Sale" was executed by Automated and Coffee Vendors. Plaintiff's complaint was filed on December 19, 2007. Even using the more generous two-year limit of subdivision (b), the complaint was untimely. The matter of the bulk sale notice is thus moot. We do note that if "[c]omplete noncompliance" with the procedures of a bulk sale does not halt the statute of limitations, a single notice, even if defective, certainly would not.
Because the sole issue is therefore whether the sale qualifies as fraudulent, we cannot follow U.S. Bank Nat. Assn. v. Ibanez (Mass. 2011) 941 N.E.2d 40, a decision by the Supreme Judicial Court of Massachusetts concerning the validity of a foreclosure notice cited by plaintiff. "In deciding whether fraudulent intent has been proven, courts must look only to rules concerning fraudulent transfers" and not look to similar provisions in statutes concerning real property. (Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1873.)
The Uniform Fraudulent Transfer Act provides in pertinent part:
"(a) A transfer made . . . 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 . . . 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 . . . . [¶] . . . [¶]
"(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 . . . was to an insider. [¶] (2) Whether the debtor retained possession or control of the property transferred after the transfer. [¶] (3) Whether the transfer . . . was disclosed or concealed. [¶] (4) Whether before the transfer was made . . . , the debtor had been sued or threatened with suit. [¶] (5) Whether the transfer was of substantially all the debtor's assets. [¶] (6) Whether the debtor absconded. [¶] (7) Whether the debtor removed or concealed assets. [¶] (8) Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred . . . . [¶] (9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made . . . . [¶] (10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred. [¶] (11) Whether the debtor transferred the essential assets of the business to a lienholder who transferred the assets to an insider of the debtor . . . ." (Civ. Code, § 3439.04.)
"A transfer made or obligation incurred by a debtor is fraudulent 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." (Civ. Code, § 3439.05.)
Plaintiff contends that he established actual intent as shown by three of the factors listed in Civil Code section 3439.04 subdivision (b), referring to numbers 1, 4, and 9. The contention is unpersuasive.
" 'Actual fraud is never presumed but must affirmatively be established . . . and where the circumstances of the transfer comport equally with the theory of honesty and fair dealing, fraud will not be found.' " (Hedden v. Waldeck (1937) 9 Cal.2d 631, 636.) Whether the sale was made with fraudulent intent is not—as plaintiff believes—a question of law, but a question of fact, which means we must uphold the trial court's finding that plaintiff had failed to prove such an intent if it is supported by substantial evidence. (Bulmash v. Davis (1979) 24 Cal.3d 691, 699; Fillip v. Bucurenciu (2005) 129 Cal.App.4th 825, 834 (Filip); Neumeyer v. Crown Funding Corp. (1976) 56 Cal.App.3d 178, 183.)
In making this determination, " '[w]e may not confine our consideration to isolated bits of evidence, but must review the whole record in a light most favorable to the judgment, resolving all evidentiary conflicts and drawing all reasonable inferences in favor of the decision of the trial court. [Citation.] We may not substitute our view of the correct findings for those of the trial court; rather we must accept any reasonable interpretation of the evidence which supports the trial court's decision . . . .' " (Filip, supra, 129 Cal.App.4th 825, 833.)
At the risk of stating the obvious, plaintiff was not privy to the sale between Automated and Coffee Vendors, and neither he nor Bauer testified. Thus, the only record from which we can conduct our review is the trial transcript of Albiani's and Moran's testimony and the trial exhibits before us. Moreover, unlike the selective approach adopted by plaintiff in his brief, we are required to adopt the construction of the evidence most favorable to upholding the judgment. (Filip, supra, 129 Cal.App.4th 825, 833.)
Of the various factors relevant to determining whether fraud occurred, the only one clearly favoring plaintiff is that he had sued Coffee Vendors prior to the sale. The only document concerning plaintiff's lawsuit is the judgment entered in July 2006. It recites that trial on this matter commenced on "8/22/95." As the actual sale of Coffee Vendors's assets to Automated did not occur until later that same month, it is virtually certain that plaintiff's suit against Coffee Vendors had already been filed.
Even so, none of the other factors had to be decided in plaintiff's favor as a matter of law. Although plaintiff treats Albiani as an "insider," we doubt this is what is meant in the statute. An insider would have been someone already associated with Coffee Vendor's, like Bauer himself, another entity he controlled, or a close relative. By contrast, Albiani seems always to have been a business competitor of Coffee Vendors. Nor was it a certainty that Coffee Vendors was insolvent at the time. It was certainly in a bad way financially, but it was still afloat and conducting operations.
In short, the record amply supports the trial court's determination that plaintiff failed to demonstrate fraud. The testimony of Albiani and Moran is substantial evidence that the sale was an arm's length transaction and a fair exchange. (Evid. Code, § 411 ["the direct evidence of one witness . . . is sufficient for proof of any fact"]; Filip, supra, 129 Cal.App.4th 825, 833.)
DISPOSITION
The judgment is affirmed.
Richman, J. We concur: Haerle, Acting P.J. Lambden, J.