Opinion
B290240
02-27-2020
THOMAS LEE, Plaintiff and Respondent, v. REMNANT & OUTCAST CHURCH OF CHRIST, et al., Defendants and Appellants.
Phillip S. Hwang for Defendant and Appellant Remnant & Outcast Church of Christ. Tony Ing, in pro. per, Defendant and Appellant Tony Ing. Wong & Mak, Fred A. Wong for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. KC067260) APPEAL from a judgment of the Superior Court of Los Angeles County, Robert A. Dukes, Judge. Affirmed as modified. Phillip S. Hwang for Defendant and Appellant Remnant & Outcast Church of Christ. Tony Ing, in pro. per, Defendant and Appellant Tony Ing. Wong & Mak, Fred A. Wong for Plaintiff and Respondent.
INTRODUCTION
This case is the third in a series of several appeals arising from an action by respondent Thomas Lee against appellant Tony Ing. In November 2011, Lee sued Ing and Fujiko Suzuki, alleging that Ing mishandled funds Lee had given him to invest, and that Suzuki was in possession of real property that Ing purchased with part of the funds. In October 2014, after a trial, the court entered a money judgment in favor of Lee against Ing, and ordered Suzuki to transfer the real property to Lee. Ing appealed, and we affirmed the judgment in a nonpublished opinion. (Lee v. Ing (Feb. 5, 2015, B253965) [nonpub. opn.].) Ing later moved to set aside the judgment on the grounds that it was obtained by extrinsic fraud. The trial court denied Ing's motion, and we affirmed that ruling in another nonpublished opinion. (Lee v. Ing (June 27, 2019, B288968) [nonpub. opn.].)
Meanwhile, in November 2014 Lee sued Ing and several others, including appellant Remnant and Outcast Church of Christ (the Church), which Ing leads. Lee alleged that Ing, the Church, and others engaged in a series of fraudulent property transfers to frustrate Lee's ability to collect on the underlying judgment against Ing. These transfers included Suzuki's transfer of the property from the underlying lawsuit to the Church, and Ing and his wife transferring their home to another couple, who later transferred it back to Ing's wife as her separate property.
In January 2018, the fraudulent transfer action proceeded to a two-day bench trial. The court found that the transfers of the two real properties were fraudulent, and voided the transfers. Ing and the Church appealed. Appellants argue that the trial court erred in refusing to allow Ing to relitigate issues from the underlying litigation, there was insufficient evidence to support the judgment, and the judge in the trial court was biased against them. We find no error and affirm the judgment.
Appellants also assert that the court erred in ordering Suzuki to transfer the real property to Lee, because Suzuki was not a party to this litigation. We agree, and strike that order from the judgment. This change has no effect on the underlying judgment, however, which also requires Suzuki to transfer the property to Lee.
FACTUAL AND PROCEDURAL BACKGROUND
A. The underlying litigation and judgment
The following facts are summarized from our opinion in the fraudulent investment action, Lee v. Ing (Feb. 5, 2015, B253965) [nonpub. opn.], and the judgment from that action, which is included in the record on appeal.
Ing is a leader of the Church, and holds himself out as an investment banker. He lectures the congregation on finance, business, and investments. Lee is a physician specializing in obstetrics and gynecology. Lee began attending the Church in late 2007.
Our 2015 opinion calls the Church the "Seventh Day Church of Christ." It appears to be the same Church that is an appellant in this case.
In May 2008, Ing convinced Lee to invest $1 million in currency trading. He represented that Lee could make 20 to 30 percent profit a year, part of which he could donate to the Church. Lee gave Ing a signed check, which Ing made out to his investment company, Hypo Capital Markets. However, Ing did not invest the $1 million in currency trading. Instead, he donated $540,000 of it to the Church to buy a property in Rowland Heights, and he spent the rest on personal expenses. The Church property was placed in the name of Church member Fujiko Suzuki, who held it in trust for the Church.
In November 2011, Lee sued Ing for breach of oral contract, fraud, conversion, common counts, civil conspiracy, and constructive trust, based on his failure to invest in currency trading. Suzuki was a named party to some of the causes of action. Ing's position at trial was that the $1 million Lee gave to Ing was related to another business venture Lee and Ing were involved in. Following a bench trial before Judge R. Bruce Minto, the court held that Ing had breached his agreement with Lee to invest the $1 million in currency trading, and that Ing made misrepresentations and concealed material facts in order to induce the investment.
On October 9, 2014, the court entered a corrected judgment in favor of Lee and against Ing in the amount of $1,808,556.67, which included compensatory and punitive damages, as well as prejudgment interest. In addition, the judgment found in favor of Lee and against Suzuki, and stated, "A constructive trust shall be placed over the parcel of real property located at 18295 Aguiro Street, Rowland Heights, CA 91748 and Suzuki is ordered to transfer full and complete title to said property to Lee forthwith." Ing appealed, and on February 5, 2015, we affirmed the judgment.
B. This action
The parties agree that this action involves allegedly fraudulent conveyances under the former Uniform Fraudulent Transfer Act (UFTA) (former Civil Code, §§ 3439-3439.12). The UFTA "'declares rights and provides remedies for unsecured creditors against transfers that impede them in the collection of their claims.' [Citation.] Under the UFTA, a transfer is fraudulent, both as to present and future creditors, if it is made '[w]ith actual intent to hinder, delay, or defraud any creditor of the debtor.' (Civ. Code, § 3439.04, subd. (a).) Even without actual fraudulent intent, a transfer may be fraudulent as to present creditors if the debtor did not receive 'a reasonably equivalent value in exchange for the transfer' 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.)" (Mejia v. Reed (2003) 31 Cal.4th 657, 664.) The UFTA is "designed to protect creditors by authorizing them to set aside transfers of property by which debtors try to avoid paying debts by putting assets beyond creditors' reach." (Renda v. Nevarez (2014) 223 Cal.App.4th 1231, 1235.)
In 2015, the UFTA was renamed the Uniform Voidable Transactions Act. (See Civ. Code, § 3439; 8 Witkin, Cal. Procedure (2019 Supp.) Enforcement of Judgments, § 488.) The 2015 changes apply only to "a right of action that accrued, transfer made, or obligation incurred, on or after" January 1, 2016. (Civ. Code, § 3439.14, subd. (a).) The transfers in this case occurred in 2013 and 2014. We therefore rely on the pre-2015 version of the UFTA, and all references to the UFTA in this opinion are to the version of the UFTA in effect in 2013.
On November 5, 2014, just one month after judgment was entered in the underlying action, Lee filed a fraudulent transfer action against Ing; Wen Zhong, Ing's wife; Michael and Ruth Bareng (the Barengs); and the Church. Notably, Suzuki was not a named defendant. Lee alleged that on August 8, 2012, he filed a lis pendens on the Aguiro Street property, which was the real property at issue in the underlying litigation. He asserted that after the trial in the underlying action but before judgment was entered, Ing and Suzuki transferred title of the Aguiro Street property to the Church "to circumvent any judgment that might be entered . . . against Ing or Suzuki." The grant deed, attached to the complaint, shows a transfer from "Fujiko Suzuki, a single woman," to the Church, on November 15, 2013.
Lee alleged that the same day, Ing and Zhong transferred title to their home at 18968 Bramhall Lane in Rowland Heights (the Bramhall Lane property) to the Barengs. This transfer was also "intended . . . to hinder [Lee] in collecting any judgment that might be entered" against Ing. The grant deed, also attached to the complaint, shows a transfer from Ing and Zhong, "husband and wife as joint tenants," to the Barengs on November 15, 2013.
Lee alleged causes of action for fraudulent conveyance regarding both properties. He contended that Suzuki, Ing, and Zhong transferred the properties without receiving equivalent value, and the transfers were part of a conspiracy intended to hinder and delay any recovery Lee might obtain through the underlying judgment. Lee requested a declaration that the transfer of the Aguiro Street property to the Church was void, and the transfer of the Bramhall Lane property to the Barengs was void. Lee also prayed for compensatory damages, punitive damages, and attorney fees. We discuss the January 2018 trial in this case below.
C. Ing's motion to set aside the underlying judgment
The following facts are summarized from our opinion in Ing's second appeal, Lee v. Ing (June 27, 2019, B288968) [nonpub. opn]. In September 2017, Ing filed a motion to set aside the judgment in the underlying action "on equitable grounds of extrinsic fraud" relating to a stipulation presented to the court during trial. On the first day of trial of the underlying action in July 2013, attorneys for both parties made their appearances and introduced Lee and Ing, who were present in court. A few moments later, Lee's counsel told the court that counsel for both parties had reached a stipulation, which Ing's counsel then read into the record: "No. 1, the total amount of money given by the plaintiff Thomas Lee to Tony Ing was not invested by Tony Ing or Thomas Lee. And no. 2, the amount of money given by Thomas Lee to Tony Ing were [sic] all spent by Tony Ing for his own personal purposes not for the benefit of Thomas Lee." In his motion to set aside the judgment, Ing argued that his attorney entered into the stipulation "without Ing's knowledge or authorization" and that the stipulation contradicted Ing's testimony and "amount[ed] to a confession on the merits."
Following a hearing on October 31, 2017, the court denied Ing's motion. The court noted that Ing had fully participated in the trial, and he failed to provide any evidence to support his claim that the stipulation contradicted his testimony or the testimony of his other trial witnesses. The court found that Ing was not "fraudulently prevented from presenting his claim or defense." The court also found no evidence of any fraud on the court or Ing.
Ing filed a motion for reconsideration in November 2017, along with additional evidence. He filed an amended motion for reconsideration in December 2017. In January 2018, he submitted a supplemental declaration with additional evidence. The court heard argument on Ing's motion for reconsideration on March 13, 2018, and denied the motion. Ing appealed, and we affirmed the ruling in an opinion issued on June 27, 2019.
D. Trial in the fraudulent transfer action
Meanwhile, the parties proceeded to a two-day bench trial in this action in January 2018 before Judge Robert A. Dukes. No trial briefs are in the record on appeal. In the reporter's transcript, the court noted that Lee had waived his claims for monetary damages and was seeking only equitable relief. The parties waived opening statements. Ing and his former attorney explained that Ing had decided to proceed in propria persona, but the attorney would continue to represent Zhong and the Barengs. The Church had separate counsel.
No exhibits are included in the record on appeal. Thus, all references to exhibits in this summary come from the testimony of witnesses. In addition, Lee presented several documents for judicial notice, many or all of which also appear to be exhibits. Neither the written request nor the documents themselves are included in the record on appeal.
Lee listed the exhibits in his respondent's notice designating record on appeal, but they are not included in the record. The trial court returned the exhibits to the parties at the close of the trial. The parties were therefore required to comply with California Rules of Court, rules 8.122(a)(1)(3) and 8.224(b)(2). It is unclear whether they did so.
Counsel for the Church objected to the court's consideration of the statement of decision from the underlying action. Judge Dukes stated that the judgment itself was relevant, but as to the "statement of decision, I'm not so certain." The court said that the statement of decision might be relevant to the extent certain matters within it constituted collateral estoppel or res judicata, but otherwise the court likely would not consider it.
Lee called Reiko Tamura to testify. She stated that she was a founding member and elder of the Church, as well as a member of the Church board. She became a member of the Church in 2008 "when we started the Church" with Ing, who was a "servant of God." Tamura reviewed Church board meeting minutes, and testified that the purpose of that board meeting was for "Fujiko Suzuki to become the trustee of the Church property," which was the Aguiro Street property. As a result, Suzuki held title of the property for the Church. Tamura testified that the entire Church board collectively chose to order the transfer because Suzuki had good credit and "we needed to make a loan through her." Tamura said that Hypo Capital Markets paid for the property; the Church did not pay for it. Tamura said she did not know where the money came from, and she did not know who controlled Hypo Capital Markets. Tamura testified that exhibit 6 was the trust agreement placing the property in Suzuki's name.
The board meeting minutes were marked as exhibit 5. The testimony did not reveal a date of the meeting.
Exhibit 7 appeared to be board meeting minutes dated November 7, 2013, which instructed Suzuki to transfer the Aguiro Street property to the Church. Tamura testified this was done because "there was some confusion from the Church members that Ms. Suzuki was holding the title," because "people, when they are trying to locate our Church, they see not the Church as a church itself, but Ms. Fujiko's name." The board therefore suggested that the property be transferred from Suzuki to the Church. Suzuki transferred the property as instructed.
On cross-examination, Tamura testified that the Church wanted to improve the Aguiro Street property by adding a sanctuary hall, and it needed a loan to do so. Suzuki obtained a loan for $270,000 for the improvements, which were completed. The Church never intended for Suzuki to own the Aguiro Street property. Tamura also testified that Ing resigned from the Church board, but she could not remember when. She testified that Ing did not tell the Church board what to do.
Lee called Wen Zhong, who testified that she had been married to Ing for 18 years, and they lived at the Bramhall Lane property. Exhibit 10 was a grant deed, and Zhong testified that she and Ing signed it before a notary public. Exhibit 8 was a grant deed notarized the same day, November 15, 2013. Zhong testified that she holds title to the Bramhall Lane property.
Zhong testified on cross-examination by her own counsel that in 2001, she and Ing had financial problems, so the Bramhall Lane property was transferred or sold to Zhong's mother. Zhong's mother then gifted the property to both Zhong and Ing, but Ing quitclaimed his interest to Zhong. Ing's name was added to the property again to refinance the property around 2007.
Zhong testified that title to the Bramhall Lane property was transferred in relation to a Church program "called Save a Home." This program involved a fund to assist Church members facing foreclosure. "One Church member, Bareng, they invest[ed] a lot of money. Probably around $230,000. But since, . . . they know Tony [Ing] lost - have some judgment, they [were] afraid they won't get [their] money back." So "we transfer[red] our property to Bareng to secure the debt, but after one year . . . they transfer[red] back the property to us." Zhong testified that the Barengs transferred the property back to her alone, and Ing signed a quitclaim deed. Zhong testified that she did not transfer the property to avoid the judgment against Ing.
Lee testified that he met Ing through a friend who took him to the Church. Ing was in charge of the Church; he led the congregation in singing songs, and he would talk about the Church, but he did not preach about the Bible or give talks on any particular subject. Lee said that he never agreed to contribute money to buy real estate for the Church.
On cross-examination by counsel for the Church, Lee said he had attended Church services at the Aguiro Street property several times. Lee denied that he ever told Church members that he donated money to buy the Aguiro Street property. The Church property was a house, and Lee was not sure whether someone lived there. Lee testified that he donated money to the Church, but he did not know how the Church used donations. Church business was not discussed at Church services. Lee did not know who was on the Church board, or how Church business was conducted. Lee was not aware of fraud relating to the Aguiro Street property. He did not know about the $270,000 loan on the Aguiro Street property. He did not know the full name of the Church.
Counsel for the Church also asked Lee several questions about what he knew or believed about the fraudulent transfers alleged in Lee's complaint. The court sustained objections to most of the questions, stating that the relevant facts would be presented by counsel, and Lee's personal knowledge and beliefs about them were irrelevant. To the extent Lee answered any of these questions, he said that he did not know about the ownership of the Aguiro Street property.
Ing attempted to cross-examine Lee about how they met and whether Ing and Lee were involved in a business transaction involving a surgical center. Ing tried to demonstrate that the scope of Lee's knowledge about the transactions at issue was limited, and the court stated, "It doesn't matter. . . . I am convinced Dr. Lee doesn't understand the intricacies of the theory that his attorney has put forward to set aside these conveyances. I don't think he does understand that. . . . [If] . . . the facts that are presented by him through his attorney show that the conveyances were fraudulent, and in order to avoid the judgment, then they are set aside. . . . But his opinion and his view [are] irrelevant." Ing also tried to ask Lee how he obtained the underlying judgment, and the court stated, "Irrelevant. It was obtained. It's a valid judgment."
Lee and Ing's involvement in the surgical center is discussed in Lee v. Ing (Feb. 5, 2015, B253965) [nonpub. opn.].
The Barengs did not appear at the trial. Over the Church's objection, the court allowed Lee's counsel to read from the deposition transcript of Michael Bareng (Michael). Michael testified that he was the president of a company called Save Every Home from 2012 through 2015. The address of the company was the Aguiro Street property, but Michael worked from home. Michael was also president of Hypo USA, Inc. from 2014 to 2015. The Church used the Aguiro Street address, and at the time of the deposition in December 2016, it continued to operate there. Ing was the leading preacher of the Church. Michael could not remember if Ing ever worked for Save Every Home. Michael also testified that he had been an owner of the Bramhall Lane property, but he had never lived there. Lee rested.
In his case-in-chief, Ing called Tamura to testify again. Ing tried to elicit testimony that Lee was "disturbing the Church" because Lee wanted to marry Zhong, Ing's wife. The court sustained objections to this line of questioning. On cross-examination by counsel for the Church, Tamura testified that Ing did not make any decisions regarding the Aguiro Street property, and Ing did not direct Tamura to transfer the property.
Reopening his case, Lee called Ing to testify. Ing stated that he and Zhong signed a grant deed transferring ownership of the Bramhall Lane property to the Barengs. The Barengs did not pay any money for the property. On cross-examination by counsel for Zhong and the Barengs, Ing said that he created the Church program Save Every Home, which was intended to help Church members facing foreclosure. Church members would raise money to buy the homes at the foreclosure sales, which would allow the struggling Church members to stay in their homes. The homes were sometimes sold back to the homeowners at the sale price plus ten percent, giving the group a ten percent return on its investment.
Ing testified that the Barengs loaned Save Every Home $230,000. They were promised a return of their investment, plus ten percent. The Barengs were concerned that they would not get their investment back, so Ing used the Bramhall Lane property as collateral. Ing testified that he had already quitclaimed the Bramhall Lane property to Zhong, so before the transfer to the Barengs, the property was Zhong's alone. On re-direct, Ing acknowledged that the Barengs' loan was to Save Every Home, but he was willing to use the Bramhall Lane property as collateral to make the Barengs "feel comfortable."
At the close of evidence, Lee's counsel again asked the court to take judicial notice of portions of the prior statement of decision. The court agreed. Ing objected, arguing that the facts in the statement of decision were "untrue." The trial court stated that the underlying decision was final and binding, and took judicial notice that Judge Minto made certain findings of fact in the underlying statement of decision.
In closing arguments, Lee's counsel asserted that despite a lis pendens on the Aguiro Street property providing notice that Lee had an interest in the property, Suzuki transferred the property to the Church. As for the Bramhall Lane property, the Barengs paid no consideration for the property, and they did not appear at trial to offer any explanation. Lee's counsel noted that defendants offered no documentary evidence to support their defense regarding the Save Every Home transaction. Lee's counsel asked the court to void the transfers for both properties, and order Zhong to transfer the Bramhall Lane property to Lee.
Counsel for Zhong and the Barengs argued that "no one was deceptive about what happened here. It's undisputed." The transfer of the Bramhall Lane property was done to secure an investment. Counsel for Zhong and the Barengs also argued that it would be improper for the court to order that the Bramhall Lane property be transferred to Lee, because it was "an attempt to circumvent proper collection actions, including [the] Homestead Act and things of that nature."
Counsel for the Church moved to strike Lee's testimony because Lee "knows so little or otherwise claims to remember nothing," so that Lee had "failed to establish the required elements" of the causes of action regarding the Aguiro Street property. The court denied the motion.
Counsel for the Church argued in closing that "Mr. Lee has made no effort to enforce this judgment against Mr. Ing." Lee's "credibility is really suspect, in that he either doesn't know, he doesn't remember, or he straight out lies to this court." Counsel for the Church also argued that Lee failed to connect Ing to any transfer of the Aguiro Street property, and cited Tamura's testimony about the Church board's decisions and obtaining a loan for improvements to the property.
Ing argued in closing that the previous judgment "was because of the stipulation," which was "false and untrue." Ing explained why he thought the stipulation was false. The judge said he was not going to consider issues that had been litigated in the earlier trial, stating, "It's been fully litigated. The judgment is final. . . . I'm bound by that judgment. I'm not here to litigate that." The judge invited Ing to address the issue relevant to the trial: "The question is whether you attempted to transfer the properties improperly to avoid [Lee's] ability to collect on" the prior judgment. Ing stated that the transfer was only to secure the Barengs' investment, and that the properly was always Zhong's separate property. After Ing said Zhong's mother transferred the property to Zhong alone, the judge asked, "She granted it to Tony Ing and Wen Zhong as husband and wife as joint tenants, so she gave you the property?" Ing answered, "Yes," but also stated that Zhong's mother insisted that Ing sign a quitclaim deed. Ing also argued that Lee knew more about the Church and Church business than he admitted, and that Lee was "trying to marry my wife, but he did not manage it. So he create all this trouble for me."
E. Statement of decision and judgment
After closing arguments, the court stated its findings and rulings from the bench. The court stated that Lee's testimony "wasn't very helpful for these proceedings," and therefore it did not carry much weight. The court found that Tamura's memory was "suspect," and "she appeared to be evasive in attempting to answer some of the questions as to how the Church's interest was acquired in the Aguiro Street property." The court stated that the timing of the transfers of both properties, completed shortly before the court in the underlying case released its statement of decision, raised "an inference that [they were] done for an improper purpose."
The court erroneously stated that the "testimony of Ms. Suzuki" was suspect, but the court was discussing the issues addressed in Tamura's testimony.
Regarding the Aguiro Street property, the court noted that in the underlying case the court ordered a constructive trust to be placed over the Aguiro Street property, and ordered Suzuki to "transfer full and complete title of said property." The court noted that Suzuki appeared as a defendant in the previous litigation, and she had the opportunity to raise the same defense that defendants asserted here: that the Aguiro Street property was at all times being held in trust for the Church. The court stated that the transfer of the Aguiro Street property was "contrary to the ultimate judgment" and "it was the intention of the defendant Suzuki to avoid the foreclosing of the property" as a result of the previous judgment. The court stated, "[T]he court does, at this time, set aside and void the deed to the Church by Ms. Suzuki, and pursuant to the judgment of Judge Minto, orders that the property be transferred to Mr. Lee in satisfaction of the previous judgment and in compliance with the previous judgment and orders and findings of Judge Minto."
Regarding the Bramhall Lane property, the court found that "the transfer was done to avoid the judgment that was about to be rendered" in the fraudulent transfer case, "with the intent to defraud and prevent Mr. Lee from satisfying the judgment through the property with the lis pendens that had previously been recorded." The court noted that although the property was purportedly transferred to the Barengs to secure an investment, Ing had no obligation to use his home as security. The transfer back to Zhong alone "was an attempt to avoid the judgment against her husband." The court continued, "So the court does void both the transfer to the Barengs and the transfer back as being an attempt to avoid the satisfaction of the previous judgment by execution of the property." The court did not order that the Bramhall Lane property be transferred to Lee, because the parties had not presented evidence regarding the value of the property, and Lee had not established the legality of using community property to satisfy a judgment against Ing alone.
The Church asked for "a written decision with appropriate findings", and the court ordered Lee to prepare a proposed statement of decision. The court returned all evidence to the proffering parties.
After considering objections to a proposed statement of decision, the court issued a final statement of decision. The court noted that trial in the underlying action was completed on August 15, 2013, and Judge Minto filed his statement of decision on November 27, 2013. Twelve days before the statement of decision was filed, on November 15, Suzuki transferred title to the Aguiro Street property to the Church. The same day, Ing and Zhong transferred title to the Bramhall Lane property to the Barengs. No evidence was presented that the transfer to the Barengs was security for an investment to Save Every Home. On November 1, 2014, the Barengs transferred title to the Bramhall Lane property to Zhong alone.
The court found that the transfer of the Aguiro Street property by Suzuki to the Church was "an intentional act, done for the purpose of frustrating [Lee's] ability to enforce the judgment" from the underlying action. Suzuki had notice from the underlying lawsuit and a notice of lis pendens that Lee claimed title to the Aguiro Street property. The testimony of Tamura and Lee demonstrated a "close relationship among Ing, Suzuki, and the Church," suggesting that the "transfer involved transactions among or between insiders." (Citing Civ. Code, § 3439.04, subd. (b)(1).) These facts created an inference that the transfer was done with the actual intent to defraud Lee.
The court also found that the Ing and Zhong's transfer of the Bramhall Lane property was "an intentional act, made for the purpose of frustrating [Lee's] ability to enforce the judgment" from the underlying action." Ing was also a defendant in the underlying action and had been served with a notice of lis pendens, and the Bramhall Lane transfer was notarized the same day by the same notary as the Aguiro Street transfer. The court noted that the Barengs never resided at the Bramhall Lane property, and "a debtor's retention [or] possession of the property after the transfer is a factor in determining whether the transfer was fraudulent. (Citing Civ. Code, § 3439.04, subd. (b)(2).) The court held that "Ing had the actual intent to defraud [Lee] when he participated in" the transfer of the Bramhall Lane property. In addition, there was no evidence that Zhong gave consideration to the Barengs when the property was transferred back to her alone, and "[t]his pattern of conduct evinces intentional conduct on the part of Ing, Zhong, and the Barengs to frustrate [Lee's] ability to levy and execute against the Bramhall Lane property to satisfy his judgment against Ing."
The court entered a judgment in favor of Lee and against all defendants. The court declared the November 15, 2013 grant deed transferring the Aguiro Street property from Suzuki to the Church void. The court ordered Suzuki to "convey full title to the Aguiro Street property to Lee, forthwith." The court declared the November 15, 2013 grant deed transferring the Bramhall Lane property from Ing and Zhong to the Barengs, and the November 1, 2014 grant deed transferring the Bramhall Lane property to Zhong void. The court ordered Zhong to "convey title to the Bramhall Lane property to herself and Ing, as joint tenants."
Only Ing and the Church appealed. Below, we refer to them collectively as appellants.
DISCUSSION
A. The record on appeal
As noted above, none of the exhibits admitted at trial or the judicially noticed documents are included in the record. The parties seem to be aware that the exhibits are not in the record, because they cite witness testimony about the exhibits, but say nothing about the exhibits themselves.
"[I]t is a fundamental principle of appellate procedure that a trial court judgment is ordinarily presumed to be correct and the burden is on an appellant to demonstrate, on the basis of the record presented to the appellate court, that the trial court committed an error that justifies reversal of the judgment." (Jameson v. Desta (2018) 5 Cal.5th 594, 608-609.) Failure to provide an adequate record on an issue on appeal requires that the issue be resolved against the appellant. (Id. at p. 609; Hernandez v. California Hospital Medical Center (2000) 78 Cal.App.4th 498, 502.) With these principles in mind, we turn to appellants' contentions.
B. Evidentiary issues
Appellants assert error as to two evidentiary issues. First, they contend that the trial court should have granted a motion in limine to bar Lee from testifying. Second, appellants assert that the trial court erred in barring Ing from presenting evidence that the underlying judgment was the result of fraud. "We review the trial court's ruling on the admissibility of evidence for abuse of discretion." (Major v. R.J. Reynolds Tobacco Co. (2017) 14 Cal.App.5th 1179, 1202.) An erroneous ruling regarding the admissibility of evidence "is grounds for reversal only if the appellant demonstrates a miscarriage of justice, that is, that a different result would have been probable had the error not occurred." (Ibid.)
1. Motion in limine to exclude Lee's testimony
Appellants assert that they "submitted a motion in limine to the trial court seeking to preclude the testimony by the one and only plaintiff's witness, the plaintiff Thomas Lee himself." They argue that Lee demonstrated in his deposition that he was "totally lacking knowledge" of "certain very crucial and material facts" relating to his allegations. Appellants also assert that the testimony of Lee's attorney would not be admissible to supplement the gaps in Lee's testimony. They contend that the "motion in limine as submitted, laid out clearly in detail the reasons why both plaintiff Lee's testimony and/or testimony of his attorney would have to be excluded at trial."
The motion in limine is not included in the record on appeal. Appellants acknowledge this, and each opening brief states in a footnote that the motion is attached as an exhibit. Neither brief includes any exhibits, however. Lee notes the omission in his respondent's brief, but appellants have not attempted to augment the record.
The court's ruling on the motion in limine also is not in the record. The only mention of the motion in limine during trial was by the Church's counsel in closing arguments, the day after Lee testified. The Church asked the court to strike Lee's testimony, and counsel stated, "I incorporate and include the arguments that were submitted to the court on Friday before we started trial in my motion in limine, objecting to Mr. Lee's testimony." The court denied the motion to strike, and did not mention the motion in limine.
"'[I]f the record is inadequate for meaningful review, the appellant defaults and the decision of the trial court should be affirmed.'" (Gee v. American Realty & Construction, Inc. (2002) 99 Cal.App.4th 1412, 1416.) With neither the motion in limine nor the ruling in the record on appeal, appellants have failed to demonstrate that the trial court erred.
2. Challenges to the validity of the underlying judgment
During trial, Ing attempted to ask Lee how he obtained the underlying judgment. The court barred this line of inquiry, stating, "Irrelevant. It was obtained. It's a valid judgment." The following day before closing arguments, Ing asked the court to read a portion of the underlying statement of decision, which stated that the parties stipulated that "the total amount of money given by Lee to Ing was not invested by Ing for Lee, but was all spent by Ing for his own personal purposes and not for the benefit of Lee." Ing also read from a 2016 deposition in which Lee stated that he did not know about any stipulation.
In his closing arguments, Ing argued that the previous judgment "was because of the stipulation," which was "false and untrue." The court said that issues litigated in the underlying litigation would not be reconsidered, stating, "It's been fully litigated. The judgment is final. . . . I'm bound by that judgment. I'm not here to litigate that."
On appeal, appellants contend that the trial court erred when it "shut down the attempt by [Ing] to challenge the validity and enforceability of the underlying judgment on grounds of the extrinsic fraud by which Ing was offering proof this judgment was obtained." Appellants assert that the trial court "should have allowed the challenge to be at least put on the record, and should have opened a separate inquiry as to [the] existence and proof of such extrinsic fraud." Lee contends that the trial court was correct in holding that issues from the underlying litigation should not be relitigated.
The trial court did not abuse its discretion in barring Ing from challenging the validity of the underlying judgment in this action. The underlying judgment against Ing was entered in October 2014, and it was affirmed by this court in February 2015. Ing moved to set aside the judgment on fraud grounds, which the trial court denied in October 2017. The trial in this case occurred in January 2018. This case was not the appropriate venue for Ing to collaterally attack either the underlying judgment or the court's ruling on Ing's motion to set it aside.
In support of their position, appellants cite Hamacher v. People (1963) 214 Cal.App.2d 180 (Hamacher). In that case, a default judgment was entered in a condemnation action. Eight months later, the defendant from the condemnation action filed a complaint alleging that the default judgment was entered due to extrinsic fraud. The Court of Appeal rejected these claims, because the defaulting defendant had been properly served in the underlying action and she had "ample opportunity to raise any defenses" in both the underlying action and in her action to set aside the judgment. (Id. at p. 183.)
Appellants also cite Granzella v. Jargoyhen (1974) 43 Cal.App.3d 551 (Granzella), in which the plaintiffs alleged that they had discovered after probate had closed that their family member's will had been forged. The plaintiffs filed a complaint against the alleged forger, and the defendant demurred. The Court of Appeal held that the plaintiffs had stated a viable cause of action: "[P]laintiffs did not contest the probate nor discover the fact that the will was forged, until after the distribution of the estate. [¶] If true, this was a situation '[w]here the unsuccessful party has been prevented from exhibiting fully his case, by fraud and deception practiced on him by his opponent, as by keeping him away from court . . ..'" (Id. at p. 556.)
Appellants also rely on McGuinness v. Superior Court (1925) 196 Cal. 222 (McGuinness). In that case, a wife filed for divorce in 1915, and in December 1915, the court issued an interlocutory decree in favor of the wife. (Id. at p. 224.) Thereafter, "the record in the case was silent until the third day of July, 1923, when it appears that upon motion of the [husband] a final decree was entered dissolving the marriage." (Ibid.) The husband died in October 1923, and his will left nothing to the wife. (Ibid.) The wife then challenged the final divorce decree, stating that after the interlocutory decree she and the husband had been living together as husband and wife, and the final decree was entered without her knowledge or consent. (Id. at pp. 224-225.) The executor of the husband's estate sought to bar any such action by the wife and to enjoin the court from taking further action regarding the divorce. (Id. at p. 225.)
The Supreme Court rejected the executor's claims, stating that the final divorce decree could have been obtained by extrinsic fraud because the wife alleged she "had no knowledge of her husband's action in seeking and obtaining the entry of such final decree and hence no opportunity to appear and resist such action." (McGuinness, supra, 196 Cal. at p. 229.) The Supreme Court also held that the superior court "retained its inherent power and jurisdiction to conduct the investigation into the integrity of its records." (Id. at p. 236.)
This case is not like Hamacher, Granzella, or McGuinness. Ing had ample opportunity to challenge the underlying judgment in both his appeal from that judgment and in his motion to set aside the judgment. The judgment was affirmed in two appeals. Here, the only issue before the court was whether the defendants had fraudulently transferred assets to thwart Lee's satisfaction of that judgment. There was no valid basis in this case for relitigating issues previously decided or for collaterally attacking the underlying judgment. Ing's challenge to the underlying judgment was not relevant to the determination of this action. Only relevant evidence is admissible (Evid. Code, § 350), and to be relevant, evidence must be "of consequence to the determination of the action." (Evid. Code, § 210.) The trial court did not err in preventing Ing from attempting to attack the underlying judgment.
C. Sufficiency of the evidence
Appellants assert that the evidence was insufficient to support the judgment because Lee "failed to establish cause for any relief whatsoever by sufficient probative evidence" because Lee "failed to submit sufficient witness evidence by either affidavit, deposition or oral examination . . . that defendants did possess the intent to do the acts constituting fraudulent transfer of assets to defraud [Lee] as judgment creditor." Appellants' argument is twofold. First, they assert that because Lee testified that he did not have personal knowledge about the transfers or ownership of the properties, there was insufficient evidence to support the verdict. Second, appellants contend that overall, Lee failed to prove the elements of a claim for fraudulent transfer.
In reviewing a judgment based on a statement of decision following a bench trial, we apply a substantial evidence standard of review to the trial court's findings of fact. (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981 (Thompson).) "Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings." (Ibid.) "It is not our role as a reviewing court to reweigh the evidence or to assess witness credibility. (Ibid.) "'[U]nder the doctrine of implied findings, the reviewing court must infer, following a bench trial, that the trial court impliedly made every factual finding necessary to support its decision.'" (Ibid., citing Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 48 (Fladeboe).)
1. Lee's testimony
Lee testified that that he did not know about ownership of the Aguiro Street property, Church business, or the property transfers at issue in this case. The court noted, "I am convinced Dr. Lee doesn't understand the intricacies of the theory that his attorney has put forward to set aside these conveyances."
Appellants assert that Lee's testimony was insufficient. They contend that a plaintiff "must prove up the foundation for obtaining a judgment, by admissible evidence. This evidence is defined as written affidavits or declarations under oath, written or oral depositions under oath, testimony under oath in open court." Appellants cite Code of Civil Procedure, section 2002, which states, "The testimony of witnesses is taken in three modes: 1. By affidavit; 2. By deposition; 3. By oral examination." Because only Lee testified, and his knowledge was limited, appellants assert that Lee failed to present sufficient evidence to support the verdict.
This argument borders on frivolous. Evidence at trial is not limited to testimony alone. "'Evidence' means testimony, writings, material objects, or other things presented to the senses that are offered to prove the existence or nonexistence of a fact." (Evid. Code, § 140.) Lee submitted multiple documents in support of his case, including the statement of decision in the underlying case, grant deeds, and Church board minutes. Several witnesses testified about the documents. The court apparently relied on these documents, citing in the statement of decision the dates of various transfers, a lis pendens, and the prior statement of decision. The court was entitled to rely on the admitted and judicially noticed documentary evidence to reach its conclusions. Appellants do not contend otherwise.
Moreover, appellants are incorrect that Lee was the only witness to testify in the plaintiff's case. In fact, Lee also called Tamura, Zhong, and Ing to testify, and he read from Michael Bareng's deposition after the Barengs did not appear at trial. We have found no authority, and appellants have cited none, holding that a plaintiff must have personal knowledge to establish a prima facie case for a fraudulent transfer claim. Appellants have failed to demonstrate error on this basis.
2. Sufficiency of the evidence in general
Appellants also contend that the evidence was insufficient to establish the elements of a fraudulent transfer under Civil Code section 3439.04, which is part of the UFTA. The court issued a statement of decision and allowed the parties to object before issuing its final statement of decision. Appellants did not challenge the trial court's statement of decision on this basis. An appellant "must bring ambiguities and omissions in the factual findings of the statement of decision to the trial court's attention. If the appellant fails to do so, the reviewing court will infer the trial court made every implied factual finding necessary to uphold its decision, even on issues not addressed in the statement of decision. The question then becomes whether substantial evidence supports the implied factual findings." (Fladeboe, supra, 150 Cal.App.4th at p. 48.) We consider appellant's contentions under this standard.
Under the UFTA, a transfer is fraudulent if made with "actual intent to hinder, delay, or defraud any creditor," "[w]ithout receiving a reasonably equivalent value" in exchange, and the debtor anticipated incurring debts beyond his or her ability to pay them. (Civ. Code, § 3439.04, subd. (a).) To determine intent, "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. (5) Whether the transfer was of substantially all the debtor's asses. (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 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. (11) Whether the debtor transferred the essential assets of the business to a lienholder who transferred the assets to an insider of the debtor." (Id., subd. (b).)
Citing Civil Code section 3439.04, appellants contend there was no evidence that Lee established the following: intent, "that defendants were indeed culpable of all the things alleged against them," that the transfers "truly caused any documentable negative impact on [Lee's] ability to enforce his judgment," that Ing never received equivalent value for the transfer of Church property, that Ing was insolvent and had debts beyond his ability to pay, that Ing transferred substantially all of his assets, or that Ing absconded. In essence, appellants contend that Lee failed to prove both intent and damages.
There is substantial evidence of intent. The court's statement of decision noted that in the underlying litigation, the court found Suzuki liable to Lee "as a result of her role in taking title to the Aguiro Street property, even though it had been purchased with the funds that Ing had defrauded from [Lee]." The underlying judgment required Suzuki to hold the Aguiro Street property in trust for Lee, and transfer the property to Lee. According to Tamura's testimony, Suzuki did not do so. Instead, Suzuki transferred the property to the Church at the direction of the Church board, despite the lis pendens served on her in August 2012, after the underlying trial had ended and shortly before the trial court's statement of decision was issued. The evidence supports the court's finding that there was a "reasonable inference . . . that Suzuki made the transfer of the property in anticipation of" the statement of decision and judgment in the underlying litigation. The court also cited Tamura's and Lee's testimony regarding Ing's control over the Church, which supports the court's finding of "an insider relationship of Ing to the Church and to Suzuki." Substantial evidence therefore supports the court's finding of intent as to the Aguiro Street property.
As to the Bramhall Lane property, the court noted that Ing and Zhong transferred the property to the Barengs on the same day Suzuki transferred the Aguiro Street property to the Church, after Ing had been sued and despite being served with a lis pendens filed by Lee. The court also noted that Michael Bareng stated in his deposition testimony that the Barengs never lived at the Bramhall Lane property. The court noted that Civil Code section 3439.04, subdivision (b)(2) allowed a factfinder to consider whether the debtor retained possession of the property after the transfer. This evidence supports the court's finding that "Ing had the actual intent to defraud [Lee] when he participated in the November 15, 2013 transfer of the Bramhall Lane property to the Barengs."
The court also cited evidence that the Barengs transferred the Bramhall Lane property to Zhong alone—and not Ing—on November 1, 2014 with no evidence of any consideration. Zhong's testimony confirmed this. The court found that these facts undercut the defendants' explanation that Ing and Zhong used the property as collateral for an investment or loan from the Barengs. "This pattern of conduct evinces intentional conduct on the part of Ing, Zhong, and the Barengs to frustrate [Lee's] ability to levy and execute against the Bramhall Lane property to satisfy his judgment." Substantial evidence supports the court's conclusion.
Sufficient evidence also supports the court's finding of damages. Suzuki was a defendant in the underlying litigation and there was a lis pendens in place on the Aguiro Street property. However, Suzuki transferred the property to the Church, a party not affected by the underlying judgment. In doing so, the portion of the judgment ordering Suzuki to transfer the Aguiro Street property to Lee became uncollectable, and Lee was damaged.
Appellants are correct that the trial court did not make a clear finding that Ing was insolvent. However, there was evidence that the Bramhall Lane property was partially Ing's asset before the transfer to the Barengs and the transfer back to Zhong, and that it was out of Lee's reach as Ing's creditor thereafter. The trial court found that the transfer was made to "frustrate" Lee's ability to collect on the judgment. Thus, although the court did not specifically find that Ing was insolvent, the doctrine of implied findings requires us to infer the trial court made every factual finding necessary to support the verdict. (See Thompson, supra, 6 Cal.App.5th at p. 981; Fladeboe, supra, 150 Cal.App.4th at p. 48.) The court found that the transfer of the Bramhall Lane property impeded Lee's ability to collect on the underlying judgment, which allows for an inference that Ing was insolvent. Substantial evidence therefore supports the trial court's findings.
D. Judicial bias
Appellants also contend that Judge Dukes was biased against them during the trial, contending, "[T]he trial transcript shows abundantly that Judge Robert Dukes, the trial judge, did not require that plaintiff Lee provide testimony to establish the factual existence of key elements of his causes of action. Instead the trial judge stepped in and assisted Lee, as if being Lee's advocate rather than an impartial judge."
Lee asserts that appellants forfeited any contention of bias by failing to object in the trial court. We agree. An appellant may preserve a claim of judicial bias for review by "object[ing] to the alleged improprieties [or asking] the judge to correct remarks made or recuse himself." (Moulton Niguel Water Dist. v. Colombo (2003) 111 Cal.App.4th 1210, 1218.) Appellants did not object on the basis of judicial bias in the trial court, and therefore any such contention on appeal has been forfeited.
Even if this claim had not been forfeited, the record shows no evidence of judicial bias. Appellants cite fifteen instances in the record in which the court sustained objections, limited the issues on relevancy grounds, refused to question facts established in the underlying litigation, denied defendants' motion to strike Lee's testimony, and made other rulings against appellants. None of these instances suggest that Judge Dukes was biased. Rather, they demonstrate that Judge Dukes was extremely patient with appellants' repeated, improper attempts to collaterally attack the underlying judgment and challenge Lee's motives for bringing the lawsuit. "'Mere expressions of opinion by a trial judge based on actual observation of the witnesses and evidence in the courtroom do not demonstrate a bias. [Citations.] Moreover, a trial court's numerous rulings against a party—even when erroneous—do not establish a charge of judicial bias.'" (Nevarez v. Tonna (2014) 227 Cal.App.4th 774, 786.) Appellants have not demonstrated error.
Appellants assert that Judge Dukes "allow[ed] all of Judge Minto's statement of decision into evidence," including Judge Minto's finding that Ing's testimony was not credible. This is incorrect. When Lee's counsel attempted to introduce that finding from Judge Minto's statement of decision, Judge Dukes stated, "I'll oppose [sic] my own objection. It's irrelevant in this trial."
E. Inclusion of Suzuki in the judgment
Appellants assert that there is a "clear error on the face of the judgment." The judgment states that the November 15, 2013 grant deed of the Aguiro Street property from Suzuki to the Church is void, and then states, "Fujiko Suzuki is ordered to convey full title to the Aguiro Street property to Lee, forthwith." Appellants argue that because Suzuki was not a party to this litigation, the court lacked jurisdiction to order her to transfer the Aguiro Street property.
A court may fashion a broad array of remedies under the UFTA, "[s]ubject to applicable principles of equity and in accordance with applicable rules of civil procedure." (Civ. Code, § 3439.07, subd. (a)(3)(C); see also Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 651-652.) However, a court generally may not adjudicate claims or enter a judgment against a nonparty. (See, e.g., People v. Hernandez (2009) 172 Cal.App.4th 715, 721 ["The federal and state Constitutions generally require that individuals be accorded procedural due process before being deprived of a protected property interest."]; In re FairWageLaw (2009) 176 Cal.App.4th 279, 286 [adjudicating claims against a shareholder not named as a party to a dissolution action violated the shareholder's due process rights]; Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1420 [limiting "imposition of liability on an entity which was never a party to the action" with respect to sanctions]; Tokio Marine & Fire Ins. Corp. v. Western Pacific Roofing Corp. (1999) 75 Cal.App.4th 110, 116 [same].)
Suzuki was a party to the underlying litigation, but she was not a party to this case. We agree with appellants that the trial court erred by ordering Suzuki to convey title to the Aguiro Street property to Lee. We therefore order that portion of the judgment stricken. (See Code Civ. Proc., § 43 ["courts of appeal, may affirm, reverse, or modify any judgment or order appealed from"].)
This change, however, should have little effect. In the judgment in the underlying action, to which Suzuki was a party and which has been finalized following Ing's appeals, Suzuki was ordered to "transfer full and complete title" to the Aguiro Street property to Lee. The transfer from Suzuki to the Church was voided by the trial court, placing the Aguiro Street property back in Suzuki's control. Nothing in this opinion changes the underlying judgment or its effect on Suzuki.
Lee asks that we modify the judgment to place a constructive trust over the Aguiro Street property. However, a constructive trust was already placed over the property in the underlying judgment. Because the transfer of the property from Suzuki to the Church has been voided, the constructive trust from the underlying judgment remains. There is no need to amend the judgment in this case to re-impose the same remedy.
F. Indispensable parties
Finally, the Church contends that it was an indispensable party to the underlying litigation and Suzuki was an indispensable party to this litigation, so "the transfer of the Aguiro Street property to the Church cannot be reversed." Lee correctly points out that this argument was forfeited by appellants' failure to assert it in the trial court. (See McKeon v. Hastings College (1986) 185 Cal.App.3d 877, 889; Jermstad v. McNelis (1989) 210 Cal.App.3d 528, 538 ["a claim of error in failing to join [an indispensable] party is not cognizable on appeal unless it is appropriately raised in the trial court or there is some compelling reason of equity or policy which warrants belated consideration."].)
Even if this argument had been preserved, the Church has not demonstrated any error. Under the UFTA, a judgment may be entered against the "first transferee of the asset or the person for whose benefit the transfer was made," or "[a]ny subsequent transferee other than a good faith transferee who took for value or from any subsequent transferee." (Civ. Code, § 3439.08, subd. (b)(1).) Here, the judgment entered against the Church—a subsequent transferee—complies with the statute. The Church cites no authority to the contrary.
We do not address the Church's argument that it should have been named as an indispensable party in the underlying litigation, which is not before us.
DISPOSITION
The judgment is modified by striking the following sentence from the judgment: "Fujiko Suzuki is ordered to convey full title to the Aguiro Street property to Lee, forthwith." As modified, the judgment is affirmed. Lee is entitled to his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
COLLINS, J. We concur: WILLHITE, ACTING P.J. CURREY, J.