Opinion
G053371
11-17-2017
TIANJIN WEINADA INTERNATIONAL TRADING CO., LTD., Plaintiff and Respondent, v. YANG WANG, et al., Defendants; TIANJIN TIANWU INTERNATIONAL TRADE DEVELOPMENT CO., LTD., Nonparty and Appellant.
Lewis Brisbois Bisgaard & Smith, Hong Lu, Christopher W. Harmon and Brittany H. Bartold; and Dean T. Cho for Nonparty and Appellant. Law Offices of William Li Niu and William Li Niu; Esner, Chang & Boyer, Stuart B. Esner and Joseph S. Persoff for Plaintiff and Respondent. No appearance by Defendants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2014-00714657) OPINION Appeal from a judgment of the Superior Court of Orange County, Ronald Kreber, Judge. (Retired judge of the Orange Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Motion to dismiss appeal granted. Appeal dismissed. Lewis Brisbois Bisgaard & Smith, Hong Lu, Christopher W. Harmon and Brittany H. Bartold; and Dean T. Cho for Nonparty and Appellant. Law Offices of William Li Niu and William Li Niu; Esner, Chang & Boyer, Stuart B. Esner and Joseph S. Persoff for Plaintiff and Respondent. No appearance by Defendants.
* * *
Nonparty Tianjin Tianwu International Trade Development Co., Ltd. (Tianwu) appeals from the judgment the trial court entered on plaintiff Tianjin Weinada International Trading Co., Ltd.'s (Weinada) claims against defendants Yang Wang, Pinland, Inc., and Pei Yi Sun. In addition to awarding Weinada nearly $4 million, the judgment also set aside the transfer of a residential property from Wang and Pinland to Sun as a fraudulent transfer, and imposed a constructive trust on title to that property in favor of Weinada and against Wang, Pinland, and Sun. The judgment does not purport to award any relief against Tianwu, and Wang, Pinland, and Sun have not appealed from the judgment.
Claiming title to the residential property as a subsequent, good faith purchaser for value, Tianwu appeals to challenge the judgment's award relating to the property. Weinada moved to dismiss Tianwu's appeal, arguing Tianwu lacked standing because it was not a party of record in the trial court.
To establish standing, an appellant must be a party of record and be aggrieved by the judgment. A party of record either is named as a party to the lawsuit or becomes a party by intervening in the lawsuit or moving to vacate the judgment in the trial court. A nonparty also has standing to appeal if the judgment would bind the nonparty based on res judicata.
Here, Tianwu did not successfully employ either of the procedures for becoming a party of record, and it failed to show it is bound by the judgment. To the contrary, Tianwu argues it cannot be bound by the judgment because it was not a party to this lawsuit, it is not in privity with any party, and the issues the trial court decided concerning the fraudulent transfer from Wang and Pinland to Sun are distinct from the issues Tianwu raises concerning its status as a subsequent, good faith purchaser for value.
Because the judgment does not award any relief against Tianwu and Tianwu failed to show the judgment is binding on it, we conclude Tianwu lacks standing to appeal and therefore grant the motion to dismiss.
I
FACTS AND PROCEDURAL HISTORY
Tianwu is in the business of importing luxury automobiles from the United States to China. During the summer of 2013, Tianwu agreed to pay Sun and his company, Onyx Auto Inc. (Onyx), $2.475 million to purchase 33 Mercedes Benz automobiles and have them delivered to Tianwu in China. In the fall of 2013, Tianwu wired the full purchase price to Onyx, but Sun and Onyx never delivered the automobiles. When Tianwu threatened litigation to recover its money, Sun and Onyx claimed they could not repay the money or deliver the vehicles.
Weinada also is in the business of importing luxury automobiles from the United States to China. In January 2014, Weinada agreed to pay Wang and his company, Pinland, more than $2.5 million to purchase 29 Mercedes Benz automobiles and have them delivered to Weinada in China. Weinada wired the full purchase price to Wang and Pinland that same month, but they never delivered the automobiles.
In April 2014, Weinada filed this lawsuit against Wang and Pinland, alleging claims for breach of contract, money had and received, conversion, unfair competition, fraud, unjust enrichment, and accounting (Breach of Contract Action). In addition to alleging Wang and Pinland breached their contract and defrauded Weinada, the complaint alleged Wang and Pinland used Weinada's money to purchase two luxury homes in Yorba Linda, California, including one located at 19847 Trotter Lane (Trotter Property). Weinada sought compensatory and punitive damages, and also an order that Wang and Pinland held title to the two residential properties as constructive trustees for Weinada. Three days after filing the complaint, Weinada recorded a lis pendens against the Trotter Property, but did not file a copy with the court until more than a month later.
In May 2014, Weinada personally served the complaint on Wang in New York. Upon receiving the complaint, Wang and his wife immediately drove from New York to an escrow office in California, where Wang executed a grant deed transferring the Trotter Property to Sun. Sun did not pay Wang or Pinland any consideration for the Trotter Property.
In June 2014, Weinada filed a second lawsuit (Orange County Superior Court Case No. 30-2014-00727077) against Sun, Pinland, and Wang alleging claims for fraudulent transfer, unjust enrichment, and constructive trust (Fraudulent Transfer Action). The complaint alleged Pinland and Wang fraudulently transferred the Trotter Property to Sun to avoid the judgment Weinada sought in the Breach of Contract Action. Weinada prayed for a judgment setting aside the transfer of the Trotter Property from Pinland and Wang to Sun as void. One day after filing the Fraudulent Transfer Action, Weinada recorded a second lis pendens against the Trotter Property.
During the first half of 2014, Tianwu continued to threaten litigation if Sun and Onyx did not return the money Tianwu paid them for the vehicles they failed to deliver. After receiving title to the Trotter Property, Sun agreed to transfer that property to Tianwu to settle its claim. In July 2014, Sun executed a grant deed transferring the Trotter Property to Tianwu. The deed stated, "This is a reconveyance of realty upon satisfaction of a debt." According to Tianwu, it gave reasonably equivalent value for the Trotter Property because Sun and Onyx owed it at least $2.475 million, the Trotter Property was listed for sale in May 2014 for $2.48 million, and the assessed value of the property for tax purposes was $1.85 million.
In early August 2014, Weinada filed a doe amendment to the complaint in the Fraudulent Transfer Action naming Tianwu as Doe 1 based on Sun's transfer of the Trotter Property to Tianwu. Less than ten days later, Weinada filed a first amended complaint in the Breach of Contract Action adding Sun as a defendant and adding claims for declaratory relief and constructive trust relating to the Trotter Property. Weinada alleged Wang and Pinland used the funds they obtained from Weinada to purchase the Trotter Property and then "fraudulently transferred" the property to Sun. The amended complaint did not include any allegations about Sun transferring the Trotter Property to Tianwu.
In January 2015, the trial court declared the two actions related and assigned them to the same judge. In February 2015, Weinada filed a motion to consolidate the Breach of Contract Action and the Fraudulent Transfer Action, but Weinada later took the motion off calendar shortly before it was scheduled to be heard in May 2015. Also in February 2015, the trial court expunged the lis pendenses Weinada recorded against the Trotter Property based on both the Breach of Contract Action and the Fraudulent Transfer Action because of deficiencies in Weinada's service of the lis pendenses.
In August 2015, one week before the trial date in the Breach of Contract Action, Tianwu filed an ex parte application to intervene and continue trial. The trial court denied the application, finding it was untimely and Tianwu lacked standing to intervene because "it is not bound by the factual or legal determinations made during the trial in [the Breach of Contract Action]." Tianwu did not appeal that ruling.
Tianwu argued it did not ask to intervene earlier because (1) it expected to become a party based on the motion to consolidate that Weinada filed but withdrew before the hearing, and (2) its previous attorney was indicted on federal charges in May 2015 and it needed time to find new counsel.
During late August 2015, the trial court conducted a six-day bench trial in the Breach of Contract Action. At the trial's conclusion, the court issued a tentative decision finding for Weinada on all claims against Wang, Pinland, and Sun, and also finding Pinland and Wang's transfer of the Trotter Property to Sun was fraudulent. The court requested briefing from the parties on what relief it could award regarding the Trotter Property, and the court ordered the parties to given Tianwu notice so it could file a brief addressing the issue.
Weinada argued the trial court should find Wang and Pinland fraudulently transferred the Trotter Property to Sun, and therefore should impose a constructive trust on the Trotter Property in Weinada's favor. Weinada, however, acknowledged the court should reserve the validity of the transfer from Sun to Tianwu for the Fraudulent Transfer Action because Tianwu was not a party to the Breach of Contract Action. In its brief, Tianwu argued the court should deny Weinada's request for a constructive trust and a judgment voiding the transfer from Wang and Pinland to Sun because Tianwu held title to the Trotter Property as a good faith purchaser for value and there was no evidence showing Tianwu had any connection to Pinland, Wang, or Sun, or their transaction with Weinada. Finally, Tianwu argued the trial court could not properly bind Tianwu or restrict its ability to use or sell the Trotter Property because Tianwu was not a party to the Breach of Contract Action. In support, Tianwu submitted declarations and documentary evidence to show the validity and value of its claim against Sun, the Trotter Property's value, and the lack of any connection to the defendants in the Breach of Contract Action.
In March 2016, the trial court entered judgment in the Breach of Contract Action in Weinada's favor and against Pinland, Wang, and Sun for nearly $4 million, including $1 million in punitive damages and more than $320,000 in costs. As to the Trotter Property, the court "ordered, adjudged, and decreed" that (1) the transfer of the Trotter Property from Pinland and Wang to Sun "is voided as fraudulent and ordered set aside," and (2) "a Constructive Trust on the title to the [Trotter Property] is granted to [Weinada] as against [Pinland, Wang, and Sun], and each of them, to satisfy the sum of $1,854,243.00 from the total judgment entered herein against the defendants." The judgment did not mention Tianwu or its interest in the Trotter Property.
Tianwu filed a notice of appeal from the court's judgment. Pinland, Wang, and Sun have not appealed.
II
DISCUSSION
A. Tianwu Lacks Standing to Appeal the Judgment Because It Was Not a Party of Record
Weinada moves to dismiss Tianwu's appeal for lack of standing because Tianwu was not a party of record in the trial court and failed to avail itself of any procedures that may have provided standing. We agree and therefore grant the motion to dismiss.
The right to appeal is purely statutory and an appellant must have standing to exercise that right. (In re Marriage of Burwell (2013) 221 Cal.App.4th 1, 12 (Burwell); Conservatorship of Gregory D. (2013) 214 Cal.App.4th 62, 67 (Gregory D.).) "'[N]otwithstanding an appealable judgment or order, "[a]n appeal may be taken only by a party who has standing to appeal."'" (People ex rel. Allstate Ins. Co. v. Dahan (2016) 3 Cal.App.5th 372, 377 (Dahan).) The standing requirement is jurisdictional and may not be waived. (Ibid.; Gregory D., at p. 67.) Whether a party has standing is a question of law. (People v. Hernandez (2009) 172 Cal.App.4th 715, 719-720 (Hernandez).) Although "[w]e liberally construe the issue of standing and resolve doubts in favor of the right to appeal" (Apple, Inc. v. Franchise Tax Bd. (2011) 199 Cal.App.4th 1, 13), we must dismiss an appeal without reaching its merits when the record shows the appellant lacks standing (Sabi v. Sterling (2010) 183 Cal.App.4th 916, 947).
Code of Civil Procedure section 902 defines who has standing to appeal. (Gregory D., supra, 214 Cal.App.4th at p. 67.) That section provides, "Any party aggrieved may appeal in the cases prescribed in this title." (Code Civ. Proc., § 902.) "The test [for appellate standing] is twofold—one must be both a party of record to the action and aggrieved to have standing to appeal." (Gregory D., at p. 67; see County of Alameda v. Carleson (1971) 5 Cal.3d 730, 736 (Carleson); Burwell, supra, 221 Cal.App.4th at p. 13 ["By its plain language, Code of Civil Procedure section 902 limits appellate standing in two important ways. To have appellate standing, one must (1) be a party and (2) be aggrieved"]; Marsh v. Mountain Zephyr, Inc. (1996) 43 Cal.App.4th 289, 295 (Marsh).)
"The general rule is that 'only a party of record to the proceedings in the trial court may appeal.'" (Burwell, supra, 221 Cal.App.4th at p. 13; see Carleson, supra, 5 Cal.3d at p. 736; Eggert v. Pac. States S. & L. Co. (1942) 20 Cal.2d 199, 201 (Eggert) ["it is a settled rule of practice in this state that only a party to the record can appeal"].) "'A party of record is a person named as a party to the proceedings or one who takes appropriate steps to become a party of record in the proceedings.'" (In re Miguel E. (2004) 120 Cal.App.4th 521, 539; see Eggert, at p. 201; In re Joseph G. (2000) 83 Cal.App.4th 712, 715 (Joseph G.).)
"A person does not become a party of record merely because his or her name and interest appear in documents filed with the court or are referenced in the judgment." (Joseph G., supra, 83 Cal.App.4th at pp. 715-716 [even though order terminating parental rights referred to alleged father by name, he lacked standing to appeal order because he failed to take steps to become party of record in trial court]; see Eggert, supra, 20 Cal.2d at p. 201 [even though judgment referred to class members and their interests, and their attorney appeared at attorney fees hearing, class members lacked standing to appeal order fixing attorney fees because they were not parties of record and did not avail themselves of opportunities to become parties].)
A nonparty aggrieved by a judgment or order may become a party of record with standing to appeal by taking the affirmative steps of (1) obtaining leave to intervene in the trial court (Carleson, supra, 5 Cal.3d at p. 736; Bates v. John Deere Co. (1983) 148 Cal.App.3d 40, 53 (Bates)); or (2) filing a motion to vacate the judgment or order (Carleson, at p. 736; Burwell, supra, 221 Cal.App.4th at pp. 13-15; Shaw v. Hughes Aircraft Co. (2000) 83 Cal.App.4th 1336, 1342-1343). "Additionally, a nonparty may appeal if a judgment or order has a res judicata effect on the nonparty." (Hernandez, supra, 172 Cal.App.4th at p. 720; see Marsh, supra, 43 Cal.App.4th at p. 295 ["'A person who would be bound by the doctrine of res judicata, whether or not a party of record, is . . . [entitled] to appeal'"].)
Here, Tianwu is not a party of record and none of the foregoing exceptions to that requirement applies. Weinada named Tianwu as a defendant in the separate Fraudulent Transfer Action, but it never named Tianwu as a defendant in the Breach of Contract Action. On the eve of trial, Tianwu moved to intervene in this action to become a party, but the court denied the motion because it was untimely and the court found the judgment would not bind Tianwu. Although that ruling was appealable, Tianwu did not appeal and the unsuccessful motion to intervene therefore does not provide Tianwu with standing to appeal the judgment. (Carleson, supra, 5 Cal.3d at p. 736 ["one who is denied the right to intervene in an action ordinarily may not appeal from a judgment subsequently entered in the case. [Citations.] Instead, he may appeal from the order denying intervention"].) Moreover, it is undisputed that Tianwu never moved to vacate the judgment, and therefore did not acquire appellate standing through that procedure.
Tianwu also did not acquire appellate standing when the trial court allowed Tianwu to file a brief and argue at the posttrial hearing about the court's disposition of the Trotter Property. Submitting a brief and argument did not make Tianwu a party. Weinada still did not name Tianwu as a defendant nor did it seek any relief against Tianwu. As explained above, a nonparty filing an objection and appearing at a hearing does not transform the nonparty into a party with standing to appeal; the nonparty must avail itself of the formal procedure for becoming a party. (Eggert, supra, 20 Cal.2d at p. 201.)
It also is important to note Tianwu's brief and the hearing took place after the trial, the court had received all the evidence on which it relied in reaching its decision, and the court announced its tentative decision. Although Tianwu submitted evidence with its brief, this posttrial hearing did not provide Tianwu an opportunity to cross-examine or otherwise challenge the evidence presented at trial. Tianwu's principal argument that it was a good faith purchaser for value is an affirmative defense to a fraudulent transfer claim (Civ. Code, § 3439.08; subd. (a); Annod Corp. v. Hamilton & Samuels (2002) 100 Cal.App.4th 1286, 1294), and the parties are entitled to a jury trial on this issue (Wisden v. Superior Court (2004) 124 Cal.App.4th 750, 756-757).
In opposing the motion to dismiss, Tianwu largely ignores the party of record requirement for appellate standing and instead focuses on whether it is aggrieved by the judgment. According to Tianwu, the judgment "casts a cloud over Tianwu's record ownership of the Trotter Property and Tianwu's right to sell the Trotter Property, by imposing a constructive trust and purporting to invalidate the Trotter Property's prior transfer between Wang/Pinland and Sun - while ignoring Tianwu's acquisition of the Trotter Property, as a good faith purchaser for value, from Sun. . . . The undermining of Tianwu's ownership interest easily constitutes a substantial, immediate and pecuniary harm necessary to confer standing." Tianwu is mistaken.
As explained above, to have appellate standing one must be aggrieved by the judgment or order and be a party of record. (Carleson, supra, 5 Cal.3d at p. 736; Eggert, supra, 20 Cal.2d at pp. 200-201; Burwell, supra, 221 Cal.App.4th at p. 13; Marsh, supra, 43 Cal.App.4th at p. 295; Gregory D., supra, 214 Cal.App.4th at p. 67.) Simply being aggrieved is not sufficient (Bates, supra, 148 Cal.App.3d at p. 53), unless the nonparty who failed to employ the available means for becoming a party of record shows the judgment or order binds the nonparty based on res judicata (Hernandez, supra, 172 Cal.App.4th at p. 720; Marsh, at p. 295).
Aggrieved by a judgment and bound by a judgment under res judicata are overlapping but separate concepts. "To be sufficiently 'aggrieved' to qualify for appeal standing, a person's rights or interests must be injuriously affected by the judgment or order, and those rights or interests '"'must be immediate, pecuniary, and substantial and not nominal or a remote consequence of the judgment . . .'" . . .' or order." (Marsh, supra, 43 Cal.App.4th at p. 295; see Dahan, supra, 3 Cal.App.5th at p. 376.)
"'"Res judicata" describes the preclusive effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. . . .' [Citation]. Three elements must exist for res judicata (or claim preclusion) to apply: '"(1) the decision in the prior proceeding is final and on the merits; (2) the present proceeding is on the same cause of action as the prior proceeding; and (3) the parties in the present proceeding or parties in privity with them were parties to the prior proceeding."'" (Association of Irritated Residents v. Department of Conservation (2017) 11 Cal.App.5th 1202, 1218-1219, fn. omitted.)
Despite Tianwu's claim it is aggrieved by the judgment, it does not attempt to show it is bound by the judgment based on res judicata. To the contrary, Tianwu repeatedly argued in the trial court the judgment did not bind Tianwu because it was not a party. On appeal, Tianwu argues the trial court could not validly make any determination about the Trotter Property that was binding on Tianwu because Tianwu was not a party to this lawsuit, it was not in privity with a party, and the issues regarding Tianwu's status as a good faith purchaser for value are different than the issues decided at trial regarding the transfer from Pinland and Wang to Sun. Tianwu's absence as a party explains why the trial court's judgment set aside the transfer of the Trotter Property from Pinland and Wang to Sun as a fraudulent transfer, and imposed a constructive trust on title to the Trotter Property against Sun, Pinland, and Wang, but made no findings or rulings about Tianwu or the transfer of the Trotter Property from Sun to Tianwu.
The current titleholder is a necessary party to an action to void a transfer as fraudulent. A creditor may obtain a personal judgment against the parties to an earlier transfer that the creditor contends was fraudulent by suing those parties. But to obtain a judgment affecting the current titleholder's property interest, the creditor must join the current titleholder as a party and give that titleholder an opportunity to defend its transfer. (Diamond Heights Village Assn., Inc. v. Financial Freedom Senior Funding Corp. (2011) 196 Cal.App.4th 290, 304-305 [appellate court reversed judgment on fraudulent transfer claim that purported to void interest of trust deed holder who was not a party to the lawsuit, and remanded for trial court to enter new judgment that did not affect trust deed holder's interest in property]; see Heffernan v. Bennett & Armour (1952) 110 Cal.App.2d 564, 586-587.) In the absence of some showing the judgment is binding on Tianwu, we decline the invitation to conclude Tianwu has standing to appeal the judgment despite its failure to employ the available procedures for becoming a party of record.
To support its position, Tianwu cites a number of cases that purportedly confer appellate standing based solely on the appellant's status as an aggrieved party. (See, e.g., In re Estate of Colton (1912) 164 Cal. 1, 5; Adams v. Woods (1857) 8 Cal. 306, 314-315; Hernandez, supra, 172 Cal.App.4th at pp. 719-720; Marsh, supra, 43 Cal.App.4th at p. 295; Guardianship of Pankey (1974) 38 Cal.App.3d 919, 925; Slaughter v. Edwards (1970) 11 Cal.App.3d 285, 291; Leoke v. County of San Bernardino (1967) 249 Cal.App.2d 767, 771 (Leoke); Butterfield v. Tietz (1966) 247 Cal.App.2d 483, 485 (Butterfield); Radunich v. Basso (1965) 235 Cal.App.2d 826, 829-830; Estate of Sloan (1963) 222 Cal.App.2d 283, 291-292; Sterling Escrow Co. v. Vandernoot (1957) 150 Cal.App.2d 735, 740; Hamilton v. Hamilton (1948) 83 Cal.App.2d 771, 774.) These cases do not support Tianwu's position because they either apply the res judicata exception granting standing to a nonparty who is bound by the judgment, or they do not address the party of record requirement at all (see Association for Los Angeles Deputy Sheriffs v. Superior Court (2017) 13 Cal.App.5th 413, 443 ["'"An opinion is not authority for propositions not considered"'").
Moreover, Tianwu misstates what some of these cases held or said. For example, quoting Leoke, Tianwu contends Weinada's party of record argument lacks merit because "under well-settled principles of California law, '[a]ny person having an interest recognized by law in the subject matter of the judgment, which interest is injuriously affected by the judgment is a party aggrieved and entitled to be heard upon appeal.'" Tianwu, however, fails to acknowledge that the sentence immediately before the one it quotes from Leoke states, "The county was a party of record; the only question is whether it was aggrieved by the judgment." (Leoke, supra, 249 Cal.App.2d at p. 770.) Leoke therefore acknowledged the party of record requirement.
Tianwu cites Butterfield for the proposition that "California appellate courts have explicitly deemed that 'when a party is plainly aggrieved by a ruling of the court, its right to a direct appeal should not be denied simply because it did not become a party to the original proceeding.'" The quote from Butterfield, however, is a summary of what the appellant argued in that case, not a statement of a rule adopted by Butterfield or any other case. (Butterfield, supra, 247 Cal.App.2d at p. 485.) To the contrary, Butterfield applied the res judicata exception to the party of record requirement to conclude a nonparty bound by the judgment had standing to appeal. (Ibid.)
Tianwu cites Marsh for the proposition that "California courts have clearly recognized an aggrieved person's standing to appeal irrespective of such person's status as a party of record or whether the person moved to vacate the order." Marsh, however, expressly recognizes the party of record requirement for appellate standing and explains that an "exception" to that requirement exists "in cases where a judgment or order has a res judicata effect on a nonparty." (Marsh, supra, 43 Cal.App.4th at p. 295.)
Notwithstanding its misinterpretation of these cases, Tianwu fails to explain how we may ignore the controlling Supreme Court precedent on appellate standing and the party of record requirement that precedent establishes. (Carleson, supra, 5 Cal.3d at pp. 736-737; see Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2016) ¶ 2:271.1, pp. 2-170 to 2-171.) As an intermediate appellate court, we are bound to follow Supreme Court precedent. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.) We conclude Tianwu lacks standing, and therefore we grant the motion to dismiss.
Based on our decision to grant the motion to dismiss, we do not reach the merits of Tianwu's appeal or the request for judicial notice it filed to support its opening brief.
III
DISPOSITION
The motion to dismiss is granted and the appeal is dismissed. Weinada shall recover its costs on appeal.
ARONSON, J. WE CONCUR: BEDSWORTH, ACTING P. J. FYBEL, J.