Opinion
NOT TO BE PUBLISHED
Appeal from judgments of the Superior Court of Orange County No. 30-2009-00118305 David C. Velasquez, Judge.
Larry J. Lichtenegger and Everett L. Skillman for Plaintiff and Appellant.
Gimino Vogele Associates and Thomas A. Vogele for Defendants and Respondents William F. Dohr, Individually and as Trustee of the William Frederic Dohr Revocable Trust and Affiliated Entities.
Jeffrey Lewis, Kelly B. Dunagan for Defendants and Respondents Atavus Investments, LLC and Affiliated Entities.
OPINION
RYLAARSDAM, ACTING P. J.
Plaintiff Lois Lynne Lintz, appearing as the trustee for two family trusts and also claiming to represent the estate of Robert H. Lintz (Lintz), deceased, appeals from two judgments dismissing her third amended complaint. The superior court entered the judgments after it sustained a demurrer to all of the causes of action of that pleading without leave to amend.
On appeal, plaintiff limits her claims to the trial court’s rulings on the fifth cause of action for breach of contract against defendant William F. Dohr (Dohr) and the eighth, tenth, and eleventh causes of action for fraudulent transfer brought against Dohr, appearing both individually and as the trustee of a trust, plus several entities purportedly controlled by him. Another issue, which the parties fail to discuss, is whether, in light of a pending cross-complaint against plaintiff and others, a final judgment exists permitting appellate review of the trial court’s ruling on the demurrer.
We conclude a final judgment has not been entered. Nonetheless, we believe it is appropriate to treat the appeal as a petition for writ of mandate and resolve the entire matter on the merits. Finally, we hold the trial court abused its discretion by sustaining the demurrer without leave to amend on the third amended complaint’s breach of contract and two of the three fraudulent transfer causes of action.
Plaintiff also questions the merits of the cross-complaint’s allegations concerning the enforceability of a promissory note and assumption agreement. In addition, she asks us to take judicial notice of Dohr’s points and authorities filed in opposition to a prior demurrer challenging the cross-complaint. The issues before us are limited to the trial court’s rulings on some of the third amended complaint’s causes of action. The merits of the amended cross-complaint and Dohr’s arguments in support of it are irrelevant here. Thus, we deny the request for judicial notice.
FACTS AND PROCEDURAL BACKGROUND
In February 2009, plaintiff and Lintz, as cotrustees of the Lintz Family Revocable Trust, filed this action against Dohr, both in his individual capacity and as trustee of the William Frederic Dohr Revocable Trust. The complaint also named a corporation and several limited liability companies as defendants.
The first count sought damages for breach of contract against Dohr. It alleged the Lintz Family Revocable Trust is the successor in interest to the Robert H. Lintz Living Trust (living trust) and “since June 2008” has owned “all property and rights previously held by the [living t]rust....” In January 1999, the living “trust[] received a [p]romissory [n]ote” for $15 million “executed by Riviera Holdings, LLC” (Riviera) “in connection with the purchase by Dohr, among others, of... a corporation owned by... Lintz.” (Capitalization omitted.) A year later the living trust, Riviera, and Dohr signed an assumption agreement, whereby Dohr agreed to become responsible for Riviera’s obligations under the promissory note in return for the living trust’s release of Riviera’s obligation on it. In January 2009, the note’s unpaid principal, which then exceeded $4.9 million, plus accrued interest came due but Dohr refused to pay it.
The complaint also contained six causes of action alleging Dohr is the corporation’s president and the limited liability companies are his alter egos. Finally, it sought a declaration concerning ownership of two real estate parcels Dohr allegedly placed in the names of limited liability companies he controlled and the validity of encumbrances secured by these properties.
Dohr answered the complaint. In addition, appearing individually and as trustee of his revocable trust, along with Sterling Homes, Inc. (Sterling Homes), Dohr filed a cross-complaint against plaintiff, Lintz, the Lintz Family Revocable Trust, and others. The plaintiffs filed a first amended complaint adding defendants and a fraudulent transfer cause of action. Thereafter, by stipulation, the parties agreed plaintiffs could file a second amended complaint and the cross-complainants could file a first amended cross-complaint.
The amended cross-complaint, filed in July 2009, contains nine counts and involves other parties and issues not relevant to this appeal. To understand the current issues it is necessary to summarize this pleading’s allegations related to its causes of action against Lintz and plaintiff for breach of oral agreement restricting enforceability of a promissory note, breach of oral novation, and promissory estoppel.
As to these counts, the amended cross-complaint alleged that, in 1999, Lintz, then 70 years old, owned several businesses involved in real estate development, including a controlling interest in Sterling Homes. The estimated value of his interest in Sterling Homes was between $15 million and $40 million.
Lintz sought “to develop a[n]... estate plan” that would “transfer his... wealth to his children and grandchildren – i.e., a ‘generation to generation’ transfer” (italics omitted), but avoid triggering the tax consequences of an outright gift of his property. In addition, Lintz had not yet identified the potential heirs to whom he wanted to leave his estate. He approved a plan developed by his accountant to sell his stock to a “‘safe interim ownership[]’” with a “subsequent sale/transfer of... Sterling Homes’[s]... holdings into a new company to be jointly owned by [Lintz’s]... designated beneficiaries.”
According to the amended cross-complaint, Lintz’s accountant created Riviera. Dohr and Dean Duncan, both longtime business associates of Lintz, agreed to serve as Riviera’s owners. Riviera purchased Lintz’s interest in Sterling Homes in January 1999 for $15 million with Dohr, as its president, executing a promissory note for that amount in favor of the living trust.
The transaction was “structured... to provide... the means of paying off the... obligation exclusively from the future earnings and/or appreciation derived from [Sterling Homes’s] on-going operation... or projected future sale or liquidation of the transferred assets.” The amended cross-complaint alleged the transaction was “to entail ‘minimal upside or downside’ for Dohr and Duncan, ” and “on various occasions before and after documentation of the... sale/transfer, [Lintz] reaffirmed and reassured both Dohr and Duncan that the... [n]ote would be serviced and paid[]off solely... from [Lintz’s]... interest in Sterling Homes.... [Lintz] also assured Dohr and Duncan that at no time would they be asked to service or pay[]off the... [n]ote with their own assets.” A year later, Duncan decided to “withdraw from Riviera.” This led to Dohr’s execution of the assumption agreement, substituting himself “as the sole interim owner of [Lintz’s]... Sterling Homes’[s] stock.”
Between 2001 and 2004, Dohr made both the required interest payments and, at Lintz’s request, additional payments of both interest and principal on the note. Lintz converted a limited liability company named Riverlakes Ranch, originally created to facilitate investment in a real estate development, into a family investment company owned by his designated heirs. Riverlakes Ranch was later renamed Atavus Investments, LLC (Atavus). In 2003 and 2004, Sterling Homes’s assets were sold to Atavus at a price and under terms intended to generate sufficient funds to allow Dohr to make the payments on the note’s interest and the balance of the principal when it matured. During this time, Lintz again assured Dohr “if future economic circumstances... prevented the balance of the... [n]ote from being paid off out of th[e] transferred assets..., [Lintz] would voluntarily forbear collection until such time as the transferred assets could be liquidated for full value in the ordinary course of business.”
Between 2004 and 2007, Dohr received proceeds from Atavus that allowed him to make the annual interest payments and pay other expenses so that “on an after-tax basis, the... transaction was essentially a wash.” But then “the real estate market... began... declin[ing] and by 2008 Sterling Homes’[s] (and Atavus’[s]) primary markets were in a free-fall.” Consequently, “Dohr made no payment on the... [n]ote in 2008” and on the January 1, 2009 maturity date, “a combination of the still depressed real estate market and ‘frozen’ credit markets prevented Atavus from liquidating Sterling Homes’[s]... account in the ordinary course of business as originally planned, thereby depriving Dohr of [Lintz’s] promised source of cash for... repayment of the... [n]ote.”
The cross-complaint further alleged that Lintz, now 82, “suffers from one or more disabilities that, among other things, markedly diminish his ability to recall important historical events and/or comprehend information concerning his past and present business affairs and financial situation, ” and thus he “remembers little or nothing about the foregoing” events surrounding the implementation of his estate plan. Dohr alleged plaintiff brought this lawsuit “as a part of a... systematic pattern” to “loot[]” Lintz’s estate.
In October 2009, Lintz died. Thereafter, plaintiff obtained permission to file the third amended complaint. This verified pleading contains 11 causes of action. It identifies plaintiff “as successor in interest to the Estate of Robert H. Lintz, ... [s]uccessor [t]rustee of the... [l]iving [t]rust, ” and “[t]rustee of the Lintz Family Revocable Trust....” It names as defendants, Dohr, both individually and in his capacity as trustee of two trusts, plus 30 other parties.
The third amended complaint’s first and second causes of action, brought in Lintz’s name, sought to rescind a resulting or constructive trust and damages for breach of fiduciary duty. Both counts were expressly “pled alternatively to the [f]ifth [c]ause of [a]ction and... based on the allegations of [the]... [f]irst [a]mended [c]ross-[c]omplaint, if those allegations are found to be true....”
The first count alleged that, in 1999, “Dohr had little property of his own and was just a ‘trusted’ employee of [Lintz] and Sterling Homes.” At that time, Lintz “agreed to transfer his interest in Sterling Homes, in trust, to Riviera..., a company set up by Dohr to be the conduit for the later transfer of Sterling Homes in trust to [Lintz’s] children....” Lintz “retained a defied [sic] beneficial interest in the trust... evidenced by the terms of the promissory note, ” while “Dohr and Duncan were to have... none of the[] assets for themselves, being solely the trustees of the assets of, and fiduciary obligors to, [Lintz] to perform the duties of the[] trust.”
After Dohr assumed Riviera’s trust obligations in December 2000, he allegedly “engaged in a pattern of using the assets of Sterling Homes for his own use and benefit in violation of his fiduciary duties to [Lintz] and without [Lintz’s] knowledge or consent.” In particular, the third amended complaint alleged Dohr “set up a company named Atavus Investments, LLC” and other similar entities “to receive the assets of Sterling... and to make investments for [his] direct use and benefit....” The third amended complaint alleged that, as a consequence, Lintz was the equitable owner of a controlling interest in Sterling Homes with Dohr “hold[ing] bare legal title to [Lintz’s] stock... as trustee.” Further, “by refusing to answer [Lintz’s] questions regarding the Sterling Homes Trust [also known as the] Atavus Trust, by using the assets of the Sterling Homes Trust and the Atavus Trust for his own use and benefit, and by failing to carry out the stated objective of the [t]rust as described” Dohr had violated his fiduciary obligations to Lintz.
The fifth cause of action sought damages for breach of contract and was “pled alternatively to the First [and] Second Causes of Action.” As in the original complaint, plaintiff alleged the living trust “received a [p]romissory [n]ote executed by Riviera” in January 1999. A copy of the note is attached to the pleading as an exhibit. Nearly two years later, the living trust, “Riviera... and Dohr entered into a written ‘[a]ssumption [a]greement’” where, “[a]s partial consideration for [the t]rust entering into [it], Dohr agreed to assume the obligations contained in the [p]romissory [n]ote....” A copy of this agreement and a January 2002 loan modification agreement between the living trust and Dohr, are also attached to the pleading. In June 2008, the living trust assigned its rights under the note, the assumption agreement, and the loan modification agreement to the Lintz Family Revocable Trust. When the note matured in January 2009, Dohr refused to pay the unpaid principal and accrued interest on it.
The third amended complaint also included three counts seeking relief based on allegations Dohr engaged in fraudulent transfers. The eighth count was brought by Lintz against Dohr, his trust, and a trust established for Dohr’s son. It alleged Dohr transferred a real estate parcel to his son’s trust in 2005 as “a ‘bona fide gift and... received nothing in return.’” At that time, Dohr purportedly “inten[ded] to hinder, delay or defraud... creditors, ” or he “made the transfer without receiving any consideration” under circumstances where it “rendered [him] insolvent, ” “his remaining assets were unreasonably small, ” or “he would incur debts beyond his ability to repay....”
The tenth count asserted the plaintiffs were damaged when Dohr acquired a second real estate parcel in 2004 and vested title in Blue Goose, a limited liability company he controlled, “to shield the property from [his] creditors.” Days before the promissory note matured, Dohr orchestrated the recordation of four deeds of trust against this property, one in his name and three in the names of limited liability companies he controlled, encumbering the property for nearly $10.5 million. Plaintiff alleged the “conveyances were without reasonably equivalent consideration and were made for the specific purpose of defrauding [them]....” The eleventh count named Dohr and three limited liability companies and sought to invalidate a deed of trust “in favor of Sterling Builders” that was recorded against a third real estate parcel held in the name of Dohr’s trust on the ground the trust deed “does not secure any obligation” because “Sterling Builders is a defunct entity and... there is no debt underlying the encumbrance.”
Dohr, appearing individually and as trustee for his trust, Sterling Homes, a second corporation named Amberhill Development Ltd., plus two limited liability companies named Grey Goose Investments and Castletown Investments, demurred to the third amended complaint. By a supplement, the demurrer attacked the fifth count on the ground it does not state a cause of action “as it fails to allege consideration flowing to Dohr supporting the alleged contract.”
The trial court sustained the demurrer to all causes of action without leave to amend and dismissed plaintiff’s action. The court entered two judgments. The first was in favor of Dohr and the other parties who filed the demurrer. The second judgment was in favor of what are described as the “affiliated defendants, ” which included Atavus, the trust established for Dohr’s son, and several other limited liability companies not included in the first judgment. Each judgment states it “shall not affect the pending [c]ross-[c]omplaint of William F. Dohr.”
DISCUSSION
1. Appealability of the Judgments Dismissing the Third Amended Complaint
To avoid the potential for abuse and expense that would result from the piecemeal disposition of a lawsuit, California follows the one final judgment rule, which declares “‘“an appeal may be taken only from the final judgment in an entire action.”’ [Citations.]” (In re Baycol Cases I & II (2011) 51 Cal.4th 751, 756.) “An appeal from a judgment that is not final... must therefore be dismissed [citations]....” (Sullivan v. Delta Air Lines, Inc. (1997) 15 Cal.4th 288, 307-308.)
In the context of an action involving both a complaint and a cross-complaint the general rule is that each pleading “is not considered sufficiently independent to allow a separate final judgment to be entered upon it [citations] unless the judgment or order on [one of the pleadings] may be considered final as to some of the parties. [Citations.]” (Sjoberg v. Hastorf (1948) 33 Cal.2d 116, 118; see also Nicholson v. Henderson (1944) 25 Cal.2d 375, 381 [“To attempt to adjudicate the rights of one party by a single judgment and those of the other by a separate judgment when the controversy is between only two parties and concerns but one subject matter... is simply an attempt to dispose of the case piecemeal, a procedure which has been condemned by this court in numerous decisions”].) “Thus, a judgment which resolves a complaint but does not resolve a cross-complaint pending between the same parties, is not final and not appealable, even if the complaint has been fully adjudicated. [Citations.]” (Westamerica Bank v. MBG Industries, Inc. (2007) 158 Cal.App.4th 109, 132.)
As for plaintiff’s claims against Dohr and the other parties named as cross-complainants, a final judgment clearly has not been entered. The third amended complaint and the amended cross-complaint concern the same transaction, the nature of the transfer of Lintz’s interest in Sterling Homes. Plaintiff and Lintz premised their original complaint on the theory the transaction involved a sale of the company, then held in the name of his living trust, which Dohr breached by failing to pay the balance due on the note when it matured. The cross-complaint described the transfer as an effort by Lintz to accomplish a tax-avoidance transfer of his wealth to his heirs that included an oral promise not to enforce the note if economic conditions precluded Dohr from using the transferred assets to comply with his obligations under it. In response, plaintiff sought to add causes of action to the effect that, assuming Dohr’s receipt of Lintz’s interest in Sterling Homes was part of a generation to generation transfer, Dohr assumed the obligations of a fiduciary and Lintz’s estate was entitled to recover on the basis of either a resulting or constructive trust theory or for breach of fiduciary duty.
There are other parties named in the third amended complaint. At first blush, as between plaintiff and the affiliated defendants, the complaint’s dismissal might be considered as final. (Johnson v. Hayes Cal Builders, Inc. (1963) 60 Cal.2d 572, 578 [“the court could enter its judgment adjudicating all the claims between these two parties without pronouncing judgment on the yet unresolved controversies between plaintiff and the other defendants”]; Nguyen v. Calhoun (2003) 105 Cal.App.4th 428, 437 [“‘It is settled that the rule requiring dismissal does not apply when the case involves multiple parties and a judgment is entered which leaves no issue to be determined as to one party’”].) But “[t]he exception only applies... where the interests of the otherwise uninvolved party are separate and distinct from the interests of parties whose rights have not been finally determined.” (Fleuret v. Hale Constr. Co. (1970) 12 Cal.App.3d 227, 230 [in action between subcontractor and prime contractor, dismissal of cross-complaint also naming subcontractor’s surety not final judgment].)
The affiliated defendants consist of entities purportedly controlled by Dohr. Further, in their brief, these parties admit their “liability in this matter is wholly derivative of Dohr’s liability.” Consequently, the interests of the named cross-complainants and the affiliated defendants are interdependent. (Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425, 430, fn. 2.)
However, one alternative is to “exercise our discretion to treat the appeal as a petition for a writ of mandate. [Citations.]” (Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 1098.) Generally, courts decline to “grant extraordinary relief at the pleading stage of a lawsuit, [but] mandamus will lie when it appears that the trial court has deprived a party of an opportunity to plead his cause of action or defense, and when extraordinary relief may prevent a needless and expensive trial and reversal. [Citations.]” (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894.) To resolve the appeal as between plaintiff and the affiliated defendants will necessarily require a resolution of her rights against the cross-complainants. Thus, we conclude it is appropriate to treat the appeal as a petition for writ of mandate and resolve the entire matter on the merits.
The elements necessary to treat this appeal as a writ are satisfied (Morehart v. County of Santa Barbara (1994) 7 Cal.4th 725, 745-746) and, while the issues presented by Dohr’s cross-complaint have not yet been resolved, since it concerns the same transaction as the complaint, “[j]udicial economy would not be served in this case by deferring resolution of the issues... until final judgment on all... causes of action” (id. at p. 746).
Therefore, in the interests of justice we treat this matter as a petition for a writ of mandate and dispose of the issues presented on their merits.
2. Standard of Review
“In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) When “reviewing a judgment dismissing a complaint after the granting of a demurrer without leave to amend, courts must assume the truth of the complaint’s properly pleaded or implied factual allegations.... In addition, we give the complaint a reasonable interpretation, and read it in context. [Citation.]” (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
“If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.) “[T]o deny the party his right to a trial, there must be an obvious failure of the pleadings to state a cause of action or defense.” (Terry Trading Corp. v. Barsky (1930) 210 Cal. 428, 438.)
Where “the trial court has sustained the demurrer, we determine whether the complaint states facts sufficient to state a cause of action. If the court sustained the demurrer without leave to amend, as here, we must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.] If we find that an amendment could cure the defect, we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.] The plaintiff has the burden of proving that an amendment would cure the defect. [Citation.]” (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.)
The same principles apply when the ruling on a demurrer is reviewed under a petition for a writ of mandate. (Garcia v. Superior Court (1990) 50 Cal.3d 728, 732; Lacher v. Superior Court (1991) 230 Cal.App.3d 1038, 1043.)
3. The Fifth Cause of Action for Breach of Contract
The court sustained the demurrer to the fifth cause of action on two grounds. First, as with all of the counts, it found “plaintiff lacks standing to sue as the successor in interest of either the estate of... Lintz... or on behalf of... the ‘Sterling Homes Trust’ or the ‘Atavus Trust’....” Second, as to the fifth count alone, while acknowledging it was “pled in ‘the alternative’ to the first cause of action, ” the court found it contained “a series of... specific, absolute and unqualified factual allegations” and thus concluded it “fails to allege facts of a bona fide loan with consideration flowing to [Dohr] in exchange for his assumption of the obligation to repay the note according to its terms.”
The court clearly erred in sustaining the demurrer to this count without granting leave to amend. On the issue of standing, while the first and second causes of action were brought on behalf of Lintz’s estate and referred to the creation of a trust involving his interest in Sterling Homes and its subsequent transfer to Atavus, the fifth count sought recovery for all plaintiffs. This included Lois Lintz appearing as successor trustee of the living trust, the party named in the promissory note attached to the third amended complaint, and as the sole remaining trustee of the Lintz Family Revocable Trust, which purportedly acquired the living trust’s rights under the note by assignment.
Generally, “[e]very action must be prosecuted in the name of the real party in interest....” (Code Civ. Proc., § 367.) By statute, the “trustee of an express trust” is entitled to “sue without joining as parties the persons for whose benefit the action is prosecuted....” (Code Civ. Proc., § 369, subd. (a)(2).) “Trustees of an express trust need not join the cestuis que trust as parties, though the title of the cause should state that they sue as trustees of the person or association for whom they are acting. If, however, the body of the complaint shows that they are trustees of an express trust and for whom they are such trustees [citation] it is sufficient....” (Lasar v. Johnson (1899) 125 Cal. 549, 555.) Thus, contrary to the conclusion reached by the trial court and repeated by defendants on appeal, it was not essential for plaintiff to allege she was a beneficiary of the either the living trust or the Lintz Family revocable trust or for her to name the trusts’ beneficiaries as plaintiffs.
Counsel has informed us the Superior Court of Monterey County has recently issued an order removing plaintiff Lois Lintz as trustee of the Lintz Family Revocable Trust. This ruling is an appealable order (Prob. Code, §§ 1304, subd. (a), 17200, subd. (b)(10)), and the time for taking an appeal from it has not yet expired (Cal. Rules of Court, rule 8.104). In light of this fact, we decline to consider the effect of the superior court’s order on the merits of the current appeal.
It is true the fifth cause of action, like all of the counts in the third amended complaint, contains a boilerplate paragraph “incorporat[ing] by reference” all of the pleading’s preceding paragraphs. This incorporation included the first cause of action’s allegations. But paragraph 34 of the first count limited its applicability by explicitly alleging it and the second cause of action were “pled alternatively to the [f]ifth [c]ause of [a]ction and are based on the allegations... in the [f]irst [a]mended [c]ross-[c]omplaint, if those allegations are found to be true....” A similar limiting statement appears in the title to the fifth cause of action.
Furthermore, to give that general allegation greater weight than the specific allegations contained in the fifth count violates the general principal of liberally construing a pleading in favor of its sufficiency. “While orderly procedure demands a reasonable enforcement of the rules of pleading, the basic principle of the code system in this state is that the administration of justice shall not be embarrassed by technicalities, strict rules of construction, or useless forms. [Citations.]” (Buxbom v. Smith (1944) 23 Cal.2d 535, 542.) Thus “specific factual allegations control the more general allegations in each cause of action [citations].” (Goldstein v. Enoch (1967) 248 Cal.App.2d 891, 894; see also Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1389 [“general pleadings are controlled by specific allegations”].) The allegations of the fifth cause of action, standing alone, satisfactorily allege plaintiff has standing to sue for breach of contract on behalf of the these trusts.
Similarly, the trial court’s reliance on the first cause of action’s allegations to conclude the fifth count failed to adequately allege consideration for Dohr’s agreement to assume the obligation of repaying the promissory note is erroneous. “A written instrument is presumptive evidence of a consideration.” (Civ. Code, § 1614.) As a result, “[t]he necessity of pleading a consideration for the contract is obviated by the fact that it is in writing....” (Henke v. Eureka Endowment Assn. (1893) 100 Cal. 429, 433.) The burden to show a lack of consideration is on defendants. (Civ. Code, § 1615.)
Defendants seek to avoid this result by relying on the rule a pleader cannot allege contradictory or antagonistic facts in a verified pleading. “[A]lthough a plaintiff may plead inconsistent counts or causes of action in his complaint [citation] even where, as here, it be verified, if there are no contradictory or antagonistic facts [citations], we are in accord with the view... that the rule was not ‘intended to sanction the statement in a verified complaint of certain facts as constituting a transaction in one count or cause of action, and in another count or cause of action a statement of contradictory or antagonistic facts as constituting the same transaction. In short, the rule does not permit the pleader to blow both hot and cold in the same complaint on the subject of facts of which he purports to speak with knowledge under oath.’” (Faulkner v. California Toll Bridge Authority (1953) 40 Cal.2d 317, 328.)
What constitutes contrary or antagonistic allegations under this rule is not entirely clear. In Steiner v. Rowley (1950) 35 Cal.2d 713, plaintiff-buyers sued a real estate broker to recover $2,000 the broker purportedly received from the vendors for successfully recommending the plaintiffs buy their property. One count alleged the “payment... was obtained... in violation of [the broker’s] duty to deal with plaintiffs honestly and fairly....” (Id. at p. 716.) Another count alleged the broker “received a secret profit of $2,000 out of a certain escrow pursuant to instructions given by... the grantees of the property....” (Ibid.) The Supreme Court reversed a dismissal of the action, in part stating “even if the facts pleaded in [the second] count show knowledge of the secret purpose of the payment, the first count would not fall because of those allegations. Concededly, all of the counts are based upon the same transaction. A complaint may plead inconsistent causes of action [citations], although it be verified, if there are no contradictory or antagonistic facts [citation]. Here the allegations in the first count to the effect that the profit was secret at most would be inconsistent with, but not antagonistic to, those of the... count in regard to the payments out of escrow. Upon trial, evidence offered in support of the first count may tend to prove the invalidity of the escrow contract, ambiguity in its terms, or mistake in connection with its execution. If, for any reason, this agreement is invalid, then the [plaintiffs] are not by imputation bound through knowledge of its provisions.” (Id. at pp. 718-719.)
The third amended complaint’s first, second, and fifth causes of action are all based on the same general set of facts. They primarily differ over the legal effect of the parties’ transactions. While the fifth count may be inconsistent with the first and second counts, the counts do not necessarily contain antagonistic factual allegations.
But even if the allegations of these counts are deemed contradictory or antagonistic to each other, sustaining the demurrer without leave to amend as to all counts and dismissing the third amended complaint in its entirety was error. In Faulkner v. California Toll Bridge Authority, supra, 40 Cal.2d 317, the plaintiffs sued to stop the construction of a bridge. In one count they alleged the defendant had allowed the project’s proponents more time to present their case than the time allowed the plaintiffs to argue in opposition to it. In another count the plaintiffs alleged the defendant failed to conduct a hearing on the project. The Supreme Court ruled “the more specific facts affirmatively alleged... []that the authority ‘allowed representatives of [p]laintiffs and other opponents to the plan... about one and one-half hours to present their arguments... [and] allowed the proponents... about four hours’[] must be accepted as precluding our construing the more general and negative allegations... to mean that the authority did in truth proceed without conducting any hearing or investigation and without permitting or considering evidence or arguments pertinent to the proper discharge of its duty.” (Id. at pp. 328-329.)
The allegations of the fifth cause of action, considered alone, state a cause of action for breach of contract. These allegations are also supported by the contents of the documents attached to the third amended complaint. More importantly, the fifth count’s allegations are nearly identical to the original complaint’s first cause of action, the allegations of which defendants concede are “unassailable on demurrer.”
Alternatively, defendants argue the allegations of the third amended complaint’s first count are conclusive judicial admissions. This argument is unavailing.
“Judicial admissions may be made in a pleading.... [Citations.] Facts established by pleadings as judicial admissions ‘“are conclusive concessions of the truth of those matters, are effectively removed as issues from the litigation, and may not be contradicted by the party whose pleadings are used against him or her.” [Citations.] “‘[A] pleader cannot blow hot and cold as to the facts positively stated.’” [Citation]’ [Citation.]” (Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 746.)
But here the fifth cause of action’s allegations concerning the transfer of Lintz’s interest in Sterling Homes is pleaded in the alternative to the first and second causes of action. “No admissions result from the permissible use of inconsistent counts or defenses unless they involve contradictions of fact in a verified pleading. [Citation.]” (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 453, p. 586.) As applied to this case, if the third amended complaint contains a permissible use of “inconsistent counts or causes of action” (Faulkner v. California Toll Bridge Authority, supra, 40 Cal.2d at p. 328), no judicial admission occurred. On the other hand, if the allegations of the first and fifth causes of action are deemed to be “contradictory or antagonistic” (ibid.), then the appropriate remedy is to strike out the contradictory material (id. at pp. 328-329).
The fifth cause of action is a continuation of the original complaint’s first count. Any defects appearing in this count have been eliminated by the dismissal of the first and second causes of action or could easily be corrected by amendment. Consequently, we conclude the trial court abused its discretion by sustaining the demurrer to the fifth cause of action for breach of contract without leave to amend.
4. The Fraudulent Transfer Causes of Action
The third amended complaint’s eighth, tenth, and eleventh counts sought relief under the Uniform Fraudulent Transfer Act. (Civ. Code, § 3439 et seq.; UFTA.)
As to the eighth cause of action, the court found it defective because plaintiff lacked standing, the count “state[d] facts contradictory and irreconcilable to facts alleged in earlier versions of the complaint, ” and the claim was “time barred.” Other than its conclusion plaintiff lacked standing, the court’s minute order and formal ruling on the demurrer do not mention either the tenth or eleventh causes of action.
“‘A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.’ [Citation.] A transfer under the UFTA is defined as ‘every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset..., and includes payment of money, release, lease, and creation of a lien or other encumbrance.’ [Citation.]” (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 648.)
“Under the UFTA, a transfer can be invalid either because of actual fraud (Civ. Code, § 3439.04, subd. (a)) or constructive fraud (id. §§ 3439.04, subd. (b), 3439.05)....” (Mejia v. Reed (2003) 31 Cal.4th 657, 661.) “A transfer of assets made by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer, if the debtor made the transfer (1) with an actual intent to hinder, delay or defraud any creditor, or (2) without receiving reasonably equivalent value in return, and either (a) was engaged in or about to engage in a business or transaction for which the debtor’s assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due. [Citations.]” (Cortez v. Vogt (1997) 52 Cal.App.4th 917, 928, fns. omitted.)
The eighth count alleges Dohr’s transfer of a real estate parcel to his son’s trust injured Lintz. “A cause of action that survives the death of the person entitled to commence an action or proceeding passes to the decedent’s successor in interest, ... and an action may be commenced by the decedent’s personal representative or, if none, by the decedent’s successor in interest.” (Code Civ. Proc., § 377.30.) The phrase “‘decedent’s successor in interest’ means the beneficiary of the decedent’s estate or other successor in interest who succeeds to a cause of action or to a particular item of the property that is the subject of a cause of action.” (Code Civ. Proc., § 377.11.) Plaintiff alleged she is the “successor in interest to [Lintz’s] estate, ” but did not allege she is either the estate’s personal representative, a beneficiary of the estate, or otherwise succeeded to this cause of action. In addition, plaintiff fails to dispute the trial court’s conclusion this cause of action was barred by the statute of limitations. Consequently, the trial court did not err in sustaining the demurrer to the eighth cause of action and plaintiff has not shown the court abused its discretion by doing so without leave to amend.
Both the tenth and eleventh causes of action seek relief for “plaintiffs.” Thus, the trial court erred in finding no standing to maintains these counts.
But the allegations of the tenth count are uncertain. (Code Civ. Proc., § 430.10, subd. (f).) It alleges Dohr first “vested title” to a second real estate parcel in “Blue Goose in order to shield the property from [his] creditors” and then, in December 2008, encumbered the property by recording four deeds of trust, one in favor of a party named “Grey Goose, ” for over $10.5 million. Plaintiff further alleged the encumbrances “were without reasonably equivalent consideration and were made for the specific purpose of defrauding plaintiffs as Dohr’s creditors.”
The third amended complaint identifies two limited liability companies named Blue Goose that Dohr purportedly controlled, Blue Goose Development, LLC and Blue Goose Investments, LLC. But the tenth cause of action fails to specify which of these entities acquired title to the second property. The same is true for the encumbrance purportedly recorded in favor of “Grey Goose.” Again, the complaint identifies two limited liability companies carrying this name, Grey Goose Development, LLC and Grey Goose Investments, LLC. But the tenth count fails to identify which of these entities holds the deed encumbering the second property.
In addition, both the tenth and eleventh causes of action are pleaded in conclusory terms, employing the statutory language found in the UFTA. In stating a fraudulent transfer cause of action, “[t]he complaint should allege the status of the plaintiff as a creditor, and the facts of a transfer within the prohibitions of the [UFTA]; e.g., a conveyance with actual intent to defraud, or a transfer by an insolvent without reasonably equivalent value. [Citations.]” (5 Witkin, Cal. Procedure, supra, Pleading, § 882, p. 300.)
Nonetheless, we conclude the deficiencies in these two counts appear amenable to correction, and thus the trial court abused its discretion in sustaining the demurrer to them without leave to amend.
DISPOSITION
Let a writ of mandate issue directing the superior court to vacate its partial judgments dismissing the third amended complaint and its order sustaining the demurrer to the entirety of the third amended complaint without leave to amend. The court shall enter a new order overruling the demurrer as to the fifth cause of action, sustaining it with leave to amend as to the tenth and eleventh causes of action, and sustaining it without leave to amend on the first, second, fourth, sixth, seventh, eighth, and ninth causes of action. Appellant’s request for judicial notice is denied. The parties shall bear their own costs.
WE CONCUR: BEDSWORTH, J., MOORE, J.