Opinion
A130658 Alameda County Super. Ct. No. HG07319942
09-08-2011
ALBERTO GONZALEZ et al., Plaintiffs and Respondents, v. AE AUTO ENTERPRISES, INC., et al., Defendants. DANESH KUMAR et al. Claimants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Danesh Kumar and Balraj Lal appeal from the denial of their third-party claims of ownership to the real property on which respondents levied to enforce their judgment against AE Auto Enterprises, Inc. Appellants contend the court erred in regard to the burden of proof and application of judicial estoppel. We will affirm the judgment.
I. FACTS AND PROCEDURAL HISTORY
AE Auto Enterprises, Inc., is a California corporation doing business as "Auto Expert." Its principal place of business is 4401 MacDonald Avenue in Richmond. Appellant Danesh Kumar (Kumar) is the corporation's president and chief executive officer, and appellant Balraj K. Lal (Lal) is its chief financial officer and secretary.
A. Respondents' Wage Claim Judgment
Respondents Alberto Gonzalez and others filed this wage claim lawsuit against "AE Auto Enterprises, Inc. dba Auto Expert" and appellant Kumar. The case went to trial.
On April 6, 2010, the court issued its Statement of Decision and Findings of Fact, awarding judgment in favor of respondents and against "AE Auto Enterprises, Inc. dba Auto Expert." On June 4, 2010, judgment was entered for damages, attorney fees, and costs in the total amount of $422,215.51.
B. Respondents' Levy on the Property
On June 14 or 15, 2010, abstracts of money judgment and writs of execution were issued in the amount of the June 4 judgment, identifying the debtor as "AE Auto Enterprises, Inc. dba Auto Expert."
On June 28, 2010, the Contra Costa Sheriff's Office levied on the real property known as 4401 MacDonald Avenue, Richmond, California. Record title to the property at the time of the levy was held in the name of "Auto Expert." Specifically, the grant deed, recorded in May 1991, vested title in "Auto Expert, a general partnership of Danesh Kumar and Balraj K. Lal."
On August 26, 2010 - after entry of judgment and the June 28, 2010 levy on the MacDonald property - Kumar and Lal recorded a grant deed purporting to transfer title to the property from "Auto Expert, a General Partnership of Danesh Kumar and Balraj K. Lal" to "Danesh Kumar and Balraj K. Lal, as Tenants in Common."
C. Appellants' Third Party Claim of Ownership of the Property
Thereafter, Kumar and Lal each filed third party claims of ownership of the levied property with the Contra Costa County Sheriff's Office. (See Code Civ. Proc., § 720.110.) The sheriff's office forwarded the documents to the superior court.
In their third-party claims, Kumar and Lal contended, essentially, that the property was purchased by their general partnership (Auto Expert), not transferred with the rest of the partnership assets to their corporation (AE Auto Enterprises, Inc.), and then passed to them as individuals when their partnership dissolved, even though record title remained in the name of the partnership.
More specifically, Kumar and Lal asserted as follows. In April 1991, they formed a general partnership known as "Auto Expert." In May 1991, the Auto Expert partnership acquired the property at 4401 MacDonald Avenue. In November 2002, Kumar and Lal incorporated their business under the name of AE Auto Enterprises, Inc. On January 1, 2003, the Auto Expert partnership sold its assets, "exclusive of real property assets," to AE Auto Enterprises, Inc. A Bill of Sale reflecting the asset purchase excluded from the sale any real property interests held by the partnership. In July 2003, the corporation filed a fictitious business name statement in Contra Costa County, stating that AE Auto Enterprises, Inc. was doing business as "Auto Expert," commencing January 2003. The fictitious business name statement was renewed in March 2008.
Kumar and Lal further asserted that, in dissolving and winding up the Auto Expert partnership, their attorney "omitted drafting and recording a grant deed transferring title for the MacDonald Avenue property from the partnership to [Kumar and Lal as individuals] as tenants in common." Nonetheless, they claimed, they treated the property as if they owned it: "While the property remained in the name of the dissolved partnership, we assumed ownership of the property as individuals and the corporation's rent payments were divided evenly between [Kumar and Lal]. We declared the rental income from the MacDonald Avenue property on our individual tax returns." On August 26, 2010, they recorded the grant deed purporting to transfer title to the property from their partnership to themselves as tenants in common.
In support of their third-party claim, Kumar and Lal submitted certain documents including the 2010 grant deed, a copy of a lease agreement by which Kumar and Lal purportedly leased the property to their corporation, and redacted copies of Schedule E from their individual federal income tax returns and redacted copies of the corporation's federal income tax returns, which indicated that Kumar and Lal had declared rents as income and the corporation had declared rents as an expense.
Respondents filed objections and an opposition to the third party claims, disputing the authenticity, accuracy, and sufficiency of the evidence Kumar and Lal provided. Among other things, respondents provided a declaration from a qualified document examiner who questioned the authenticity of some of the documents Kumar and Lal submitted, including the agreement by which Kumar and Lal purportedly leased the property to the corporation. The declarant asserted: ". . . [I]n examining Exhibit J, Commercial Lease, it is apparent that the document contains white out in several areas, including but not necessarily limited to the parties to the lease, as well as the signator . . . In addition, the mis-match of staple holes from pages 1 to 2 to 3 indicated possible page substitution, with the title page not matching the signature page. . . . Based on my experience, qualifications and review of the documents listed above . . ., I would recommend that the Court question the authenticity of these documents, until such time as I am provided an opportunity to review the originals."
Further, a declaration from respondents' attorney averred that Kumar and Lal had "encumbered, assigned, transferred, and/or disposed of the majority of [AE Auto Enterprises, Inc.'s] assets" since the entry of the court's April 2010 statement of decision. "The majority of such encumbrances, assignments, and transfers have been to the benefit of [Kumar and Lal's] newly formed corporation K&L Auto Expert, Inc.," which was incorporated six days after the court's decision. A fictitious business name statement filed three days thereafter represents that K&L Auto Expert Inc. began operating at 4401 MacDonald Avenue on April 15, 2010.
D. Court's Order and Judgment Denying Third Party Claim
After a hearing, the court on November 15, 2010, denied the third party claims of Kumar and Lal and ordered the disposition of the MacDonald Property. The court concluded: "Claimants Danesh Kumar and Balraj Lal, aka Balraj K. Lal, have not met their burden to [] establish the validity of their third party claim to ownership. Code of Civil Procedure section 720.390. Claimants do not dispute that title was held in the name of the Auto Expert partnership when this action was filed and when judgment was entered, and that title has been held in the name of the partnership since 1991. Claimants contend that the manner in which title is held creates only a presumption of ownership, which they have rebutted with evidence that they own the property as individuals. However, the evidence submitted by Claimants falls short of meeting their burden to show that they own the property as individuals." The court continued: "Claimants contend that the partnership was dissolved at the time of the sale of partnership assets in 2003, and that even though title was not changed to reflect a transfer from the partnership to the Claimants, they assumed ownership and control over the property. Claimants also contend that the corporation to which they sold the partnership assets thereafter paid rent to them as individuals, and that this fact is reflected in the redacted tax returns of the claimants and the corporation."
The court then evaluated the evidence as follows: "The Court concludes that the evidence is equally, if not more susceptible to the conclusion that the sale of the partnership assets to the corporation in 2003, which excepted from the sale the real property owned by the partnership, did not reflect the reality that the corporate entity, AE Auto Enterprises, Inc., the Judgment Debtor in this action, became the actual owner of the property and remained so until judgment was entered in this action. The evidence in this case is undisputed that Claimants exercise complete control over the Judgment Debtor. There is substantial evidence of machinations by the Claimants and Judgment Debtor to create confusion about actual ownership and control over the assets of the Judgment Debtor. Claimants' evidence offered to support their assertion that they had possession and control of the real property is completely consistent with the conclusion that they were doing so on behalf of the corporate entity, and that the failure to include the property in the written Purchase Agreement reflecting the sale of the business was intended only to reduce taxes and possibly to frustrate creditors. This is evident in the testimony of Balrath [sic] Lal at trial, at which he testified that the partnership sold all of the assets of the business to the Judgment Debtor. Claimants are estopped to deny that this was their intent. The attempt to create confusion about the actual ownership is further evidenced by the fact that title was held in the name of Auto Expert, which is also the fictitious business name of Judgment Debtor AE Auto Enterprises, Inc. It is also reflected in the fact that Claimants did not bother to change the title to the property until it became necessary to do so to frustrate Plaintiffs' collection efforts, and in the cryptic evidence offered to support their claim that they own and possess the property, even though they do not hold legal title. Further, the tax returns submitted, even if not redacted, would not show actual possession and control of the property by the Claimants as individuals. The tax returns indicate that Claimants and Judgment Debtor attempted to structure their business dealings in a manner that transferred tax liability from the corporation to the Claimants as individuals, but in the circumstances present in this case, such evidence has little probative value with respect to actual possession and control of the property. [¶] . . . [¶] At the hearing, both parties acknowledged that the Court's determination of ownership is equitable in nature. Here, Claimants are attempting to rely on the legal distinction between the corporate entity, which they control for their own benefit, and their legal status as individuals. However, legal title to the property was not held by Claimants as individuals, but by the partnership. In attempting to rebut the presumption that the partnership owns the property, Claimants present evidence that is equally consistent with the conclusion that the Judgment Debtor, AE [Auto] Enterprises, Inc., is the actual owner and possessor of the real property, and that the manner in which Claimants and the Judgment Debtor AE [Auto] Enterprises, Inc., have maintained title does not reflect reality. Although the issue is not directly before the Court, the most reasonable inference is that Judgment Debtor AE [Auto] Enterprises, Inc., owns and controls the property, and that the property is subject to levy by creditors of AE [Auto] Enterprises, Inc."
The court denied claimants' request for leave to amend their third party claim to allege that the partnership owns the property, since that contention was inconsistent with their assertions in their third-party claims and their opposition to respondents' earlier motion to turnover rents, and with the testimony of Lal at trial.
By judgment entered on November 19, 2010, the court ordered that the sheriff proceed with the levy on the property.
This appeal followed.
II. DISCUSSION
Code of Civil Procedure section 720.110, subdivision (a) provides: "A third person claiming ownership or the right to possession of property may make a third-party claim under this chapter in any of the following cases if the interest claimed is superior to the creditor's lien on the property: [¶] (a) Where real property has been levied upon under a writ of attachment or a writ of execution." The third person has the burden of proof. (Code Civ. Proc., § 720.360.)
As framed by the parties in the trial court, the question was whether Kumar and Lal established that they had an interest in the 4401 MacDonald Avenue property that was superior to the creditor's lien. Substantial evidence supports the trial court's conclusion that Kumar and Lal failed to establish such an interest.
The court found that the sale of the partnership assets to AE Auto Enterprises, Inc. in 2003, by a writing that purportedly excepted the partnership's real property from the sale, did not reflect the reality that AE Auto Enterprises, Inc., became the actual owner of the property. The court based this conclusion on: the "undisputed" evidence that Kumar and Lal exercise complete control over AE Auto Enterprises, Inc.; Kumar and Lal, along with AE Auto Enterprises, Inc., engaged in "machinations" to create confusion about the actual ownership and control over AE Auto Enterprises, Inc.'s assets, such as holding title in the name of Auto Expert (the fictitious business name of AE Auto Enterprises, Inc.) and not changing title to the property until respondents obtained judgment and commenced their collection efforts; the exception of the property in the Purchase Agreement reflecting the sale of the business to AE Auto Enterprises, Inc., was intended only to reduce taxes and possibly to frustrate creditors, as evidenced by Lal's trial testimony that the partnership in fact sold all of the business assets to AE Auto Enterprises, Inc.; and the tax return entries indicating rental payments for the property as income on Kumar and Lal's individual returns and an expense on the returns of AE Auto Enterprises, Inc., provided substantial evidence that Kumar and Lal attempted to transfer tax liability from AE Auto Enterprises, Inc. to them as individuals, rather than showing actual possession and control of the property as individuals. All of these findings and conclusions were supported by the evidence submitted by the parties, discussed ante. On this basis, the trier of fact could reasonably conclude that the partnership's interest in the property was transferred to AE Auto Enterprises, Inc., and that Kumar and Lal did not establish they were the true owners of the property or had an interest in the property superior to that of respondents as judgment creditors.
No contention is made in this appeal that the levy could not be imposed on property owned by "Auto Expert, a general partnership of Danesh Kumar and Balraj K. Lal," on the ground that the name of the judgment debtor is not the partnership but "AE Auto Enterprises, Inc., dba Auto Expert." As described ante, the trial court found that, in reality, AE Auto Enterprises, Inc., became the actual owner of the property upon the partnership's transfer of assets to the corporation in 2003, the corporation "owns and controls the property," and "the property is subject to levy by creditors of AE [Auto] Enterprises, Inc."
Appellants do not challenge the sufficiency of the evidence directly. Instead, they contend that (1) the court misapplied the burden of proof and (2) the court erred in applying judicial estoppel to preclude consideration of their declarations.
A. Burden of Proof
Kumar and Lal argue that, although Code of Civil Procedure section 720.360 provides that the "third person has the burden of proof," the burden of proof shifts to the creditor where the court bases its analysis on fraud or a fraudulent transfer of ownership by the third party. For this proposition, they rely on Whitehouse v. Six Corporation (1995) 40 Cal.App.4th 527 (Whitehouse), which stated in part that once a third party "introduce[s] evidence" of its ownership of the property, the "creditor has the burden of proof to establish a fraudulent transfer." (Id. at p. 535.) Arguing that the court in this case based its ruling on findings of fraud, Kumar and Lal urge that the court should have placed the burden on respondents to prove that Kumar and Lal fraudulently transferred or failed to transfer title to the property. Further, they argue, because the court found the evidence "equally, if not more susceptible" to the conclusion that AE Auto Enterprises, Inc. was the true owner of the property, respondents failed to meet that burden and the judgment must be reversed. (Italics added.) The argument is meritless.
In Whitehouse, respondent creditor brought an action against Hill Top Developers, Inc. (Hill Top) and others, seeking judicial foreclosure and sale of certain property. (Whitehouse, supra, 40 Cal.App.4th at pp. 530-531.) When the action was filed, Hill Top was owned by appellant Reeder and her husband. (Id. at p. 531.) After the Reeders dissolved their marriage, respondent creditor obtained a prejudgment writ of attachment for the property. (Ibid.)Meanwhile, Hill Top transferred its interest in the property by deeds to appellant Reeder and appellant Interstate. (Ibid.)Judgment in the underlying action was entered in favor of the respondent creditor and against Hill Top, directing a foreclosure sale. (Ibid.)Appellants Reeder and Interstate filed a third party claim of ownership, alleging they had lawfully acquired title to the parcels. (Ibid.)In response, respondent creditor asserted that the transfers of the properties from Hill Top to appellants were fraudulent. (Id. at pp. 531-532.) After an evidentiary hearing, the court denied the third party claim, finding that appellants failed to sustain their burden of proof. (Id. at p. 532.)
On appeal, appellants contended the trial court improperly placed the burden of proof upon them to establish that the challenged transfers were bona fide, arguing that in an action to establish a fraudulent transfer, the creditor must prove the transferor's intent by clear and convincing evidence. (Whitehouse, supra, 40 Cal.App.4th at p. 533.) The appellate court concluded that, although the proper standard is merely the preponderance of the evidence, the creditor does have the burden of proving its claim of a fraudulent transfer. (Id. at p. 534.) While Code of Civil Procedure section 720.360 ascribes the burden of proof to the third person, the court explained, the statute does not "abrogate the well-established rule concerning the burden of proof required in fraudulent transfer actions." (Whitehouse, at p. 534.) Thus, "[a] creditor wishing to pursue a fraudulent transfer theory may not escape the burden of proving its claim merely because the contest is played out in a third party claim proceeding." (Id. at p. 535, italics added.) In this context, the court asserted: "The third party claimant is required to introduce evidence that it owns the attached property. [Citation.] Once the third party accomplishes this, the burden shifts to the creditor to establish that the transfers represented by the deeds were fraudulent. [Citation.]" (Id. at p. 535.) The court held: "when a creditor resists the claim by asserting the property has been fraudulently transferred to the third party, the creditor must prove this allegation by a preponderance of the evidence." (Id. at p. 530, italics added.)
Whitehouse is inapposite to the matter at hand. There, the third party relied on a theory that record title established its interest in the property, the creditor attempted to rebut the resulting presumption of title in the third party by alleging that the transfer was fraudulent, and the creditor thereby undertook the burden of proving fraud. Here, by contrast, Kumar and Lal did not rely on a theory that record title established their interest in the property - because record title was not in their name, but in the name of the partnership. Instead, Kumar and Lal argued that they had an ownership interest, despite the fact that record title was in the partnership's name, because the property was not deeded to AE Auto Enterprises, Inc. and instead passed to them upon the partnership's dissolution. Accordingly, respondents in this case did not attempt to rebut any evidence of record title by alleging a fraudulent transfer, and they did not take on the burden of proving anything. Whitehouse is not germane.
At the hearing, for example, Kumar and Lal's counsel stated: "We are claiming that these two individuals own the property, not that they hold title to the property. . . . [L]egal title or recorded title is simply a presumption of ownership, and the issue is ownership, not whether or not these individuals hold title, and this is a rebuttable presumption as to legal title." (Italics added.)
Kumar and Lal nonetheless pick out phrases from the court's order and argue that the court relied on a theory of fraud or fraudulent transfer to rule in respondents' favor. They claim the court found fraud in two respects: (1) Kumar and Lal's failure to change the title to the property to their own names in 2003 was intended "to create confusion about actual ownership and control over the assets of" the corporation and "possibly to frustrate creditors;" and (2) Kumar and Lal changed title to the property from the partnership to themselves in 2010, after the property was levied upon, "to frustrate Plaintiffs' collection efforts." Kumar and Lal misperceive the court's references.
The first item - failure to change the title to the property to their own names in 2003 - was not a fraudulent transfer, but a deceitful decision not to record title in a manner that would reflect the true owner of the property. Whitehouse pertained specifically to fraudulent transfers, and neither the court nor respondents characterized this to be one. The point was not that Kumar and Lal's evidence of ownership should be disregarded because it was perpetrated as a fraud, but that their evidence of ownership can be explained by something other than an intent to own the property, and thus was insufficient to prove that Kumar and Lal are the actual owners of the property.
The second item - Kumar and Lal's attempt to transfer title to the property from the partnership to themselves "to frustrate Plaintiffs' collection efforts" - might arguably be a fraudulent transfer, but the court did not refer to it in this sense, let alone make any finding of a fraudulent transfer. The court's point was that Kumar and Lal did not attempt to transfer the title until after the judgment and levy on the property, thus casting serious doubt on their assertion that they received their ownership interest as individuals upon dissolution of the partnership approximately seven years earlier. Again, Kumar and Lal's evidence lacked credibility and their arguments were unpersuasive.
Indeed, the 2010 transfer of title from the partnership to Kumar and Lal as individuals was ineffective whether it was a product of fraud or not. Because the court found that AE Auto Enterprises, Inc., rather than the partnership, was the true owner of the property when the partnership attempted to transfer the title, the partnership simply had no title to transfer. Explicitly or implicitly, it was on this basis that respondents attacked Kumar and Lal's evidence and the court rejected Kumar and Lal's arguments. (We would also question how the partnership could effectively transfer title to anything in 2010, given Kumar and Lal's representation that the partnership no longer existed.) Furthermore, even if the 2010 record title had been challenged as fraudulent, evidence showing that the transfer from the partnership to Kumar and Lal was without fair consideration would have shifted the burden back to Kumar and Lal; the record supports the conclusion that their evidence was insufficient to meet it. (Whitehouse, supra, 40 Cal.App.4th at p. 534 ["If the creditor shows that a conveyance made by a debtor is presumptively fraudulent because it has been made without fair consideration, the burden shifts to the party defending the transfer. [Citation.]"].)
At any rate, to the extent this fraud of Kumar and Lal played a role in the court's analysis, it is clear that the court believed the fraud was established by the preponderance of the evidence. Although the court stated that the evidence was "equally, if not more susceptible to the conclusion that the sale of the partnership assets to the corporation in 2003, which excepted from the sale the real property owned by the partnership, did not reflect the reality that . . . AE Auto Enterprises, Inc. . . . became the actual owner of the property and remained so until judgment" - pertaining to the overall finding that Kumar and Lal had not rebutted the presumption created by the title showing ownership in the partnership - the court used very different words when discussing Kumar and Lal's 2010 attempt to transfer the property from the partnership to themselves: "The attempt to create confusion about the actual ownership . . . is also reflected in the fact that Claimants did not bother to change the title to the property until it became necessary to do so to frustrate Plaintiffs' collection efforts." (Italics added.)
Kumar and Lal fail to establish error.
B. Judicial Estoppel
Kumar and Lal contend the court erred in ruling that judicial estoppel precluded them from claiming they did not intend to transfer the real property from the partnership to AE Auto Enterprises, Inc. In this regard, they refer to the following statement by the court: "Claimants' evidence offered to support their assertion that they had possession and control of the real property is completely consistent with the conclusion that they were doing so on behalf of the corporate entity, and that the failure to include the property in the written Purchase Agreement reflecting the sale of the business was intended only to reduce taxes and possibly to frustrate creditors. This is evident in the testimony of [Lal] at trial, at which he testified that the partnership sold all of the assets of the business to the Judgment Debtor. Claimants are estopped to deny that this was their intent." (Italics added.)
As relevant here, Lal's prior testimony at trial was as follows: "[Respondents' Counsel]: When the corporation was created, did you provide any money to start the corporation? [¶] A. No, I did not. [¶] Q. Did Mr. Kumar provide any money to start the corporation? [¶] A. Not from - not from him personally, no. [¶] . . . [¶] Q. Did anybody else provide any money to AE Auto Enterprises, Inc. when it was first created? [1] [Objection overruled.] [¶] A. Nobody - from personally? No. From Auto Expert when we transferred from Auto Expert to Inc., we transferred everything over to the corporation. There was no money exchange." (Italics added.) The testimony was elicited during cross-examination, when respondents' attorney was attempting to establish that the corporate veil of AE Auto Enterprises, Inc., should be pierced, and Kumar should be held liable under an alter ego theory, due to the disregard of corporate formalities and inadequate capitalization of the corporation.
Judicial estoppel may be applied where: (1) the same party has taken two positions; (2) the positions were taken in judicial proceedings; (3) the party was successful in asserting the first position; (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake. (Jogani v. Jogani (2006) 141 Cal.App.4th 158, 169.)
Kumar and Lal contend that, in context, Lal's trial testimony was not totally inconsistent with their position at trial, because at trial he was referring to the funding of AE Auto Enterprises, Inc. when the corporation was first formed, not whether the real property was transferred from the partnership to the corporation. They also contend they were not successful in asserting their position at trial (for purposes of judicial estoppel), because the court did not rely on this line of testimony in finding that Kumar was not liable under an alter ego theory. (See Jogani, supra, 141 Cal.App.4th at pp. 171-181.) Respondents counter that Lal - and Kumar, who was facing personal liability under an alter ego theory - took the position that all assets were transferred to the corporation in order to avoid a finding of personal liability, and they were successful in this position because the court rendered judgment in Kumar's favor on this basis.
Kumar and Lal argue in part that, because Lal testified that he and Kumar "transferred 'everything' from the partnership to the corporation, while in reality they transferred nearly everything, and everything relevant in the context of the question related to alter ego liability," Lal's statements "were not inconsistent, or if they were, they were inconsistent only in part - not 'totally inconsistent' as required for judicial estoppel to apply." We must disagree with this argument. A claim that the partnership "transferred everything over to the corporation" is totally inconsistent with a claim that the partnership did not transfer everything over to the corporation. Only when the testimony is placed in context does it become uncertain whether Lal's statements at trial are totally inconsistent with their position at the hearing; the record provided by appellants is insufficient to resolve this uncertainty.
Whether or not there was a sufficient basis for judicial estoppel, it is clear that the court did not commit prejudicial error. In the first place, regardless of whether judicial estoppel could be applied in this situation, the trial court could certainly consider the credibility of a witness who, during the trial at which alter ego was at stake, testified that "everything" was transferred to the corporation, and in connection with a motion at which the ownership of the real property was at stake, claimed that the real property was not transferred to the corporation. In this context, the court's finding that Lal's prior testimony "estopped" them from claiming that they did not intend to transfer all the property to the corporation was nothing more than the identification of one of several reasons the court had for concluding that their current claim was not credible.
Similarly, even if the court erred in applying judicial estoppel, its error did not change the result. Without the application of judicial estoppel, other evidence amply supported the conclusion that Kumar and Lal in fact transferred the real property to AE Auto Enterprises, Inc., and there was sufficient evidence to support the trial court's ruling, as set forth in our discussion of the substantial evidence ante.
Kumar and Lal contend that the court's estoppel finding was prejudicial because, due to that finding, the court did not consider their declarations, and if it had considered their declarations the court would have ruled in their favor. The contention is untenable if not frivolous. The reporter's transcript of the hearing and the court's order both show that the court fully considered the evidence that Kumar and Lal had included in their declarations, and simply found the evidence insufficient. The court observed: "Claimants' evidence offered to support their assertion that they had possession and control of the real property is completely consistent with the conclusion that they were doing so on behalf of the corporate entity, and that the failure to include the property in the written Purchase Agreement reflecting the sale of the business was intended only to reduce taxes and possibly to frustrate creditors." (Italics added.) The court also stated: "The attempt to create confusion about the actual ownership is . . . also reflected in . . . the cryptic evidence offered to support their claim that they own and possess the property, even though they do not hold legal title." (Italics added.) The court continued: "Further, the tax returns submitted, even if not redacted, would not show actual possession and control of the property by the Claimants as individuals. The tax returns indicate that Claimants and Judgment Debtor attempted to structure their business dealings in a manner that transferred tax liability from the corporation to the Claimants as individuals, but in the circumstances present in this case, such evidence has little probative value with respect to actual possession and control of the property." (Italics added.) In addition, the court noted: "In attempting to rebut the presumption that the partnership owns the property, Claimants present evidence that is equally consistent with the conclusion that the Judgment Debtor, AE Enterprises, Inc., is the actual owner and possessor of the real property, and that the manner in which Claimants and the Judgment Debtor AE Enterprises, Inc., have maintained title does not reflect reality." (Italics added.) Indeed, if the court had disregarded all the evidence in Kumar and Lal's declarations as they suppose it did, the court would have expressed its ruling in terms much stronger than the "evidence is equally, if not more susceptible" to the conclusion that AE Auto Enterprises, Inc. was the true owner of the property.
Kumar and Lal fail to establish prejudicial error.
In their respondents' brief, respondents request sanctions against appellants and their attorneys. We deny the motion for failure to file a separate motion and accompanying declaration. (Cal. Rules of Court, rule 8.276.)
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III. DISPOSITION
The judgment is affirmed.
NEEDHAM, J.
We concur.
JONES, P. J.
SIMONS, J.