Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG07361274
Lambden, J.
In a prior lawsuit, Alanna Spencer sued Ryan Marshall, IRES, and others for violating Civil Code section 1695 et seq., the Home Equity Sales Contract Act (HESCA), with regard to property she had owned in Hayward (the property or the Hayward property). While Spencer’s property was in foreclosure, she signed an agreement to permit Marshall or his assignee to purchase his property. Subsequently, Lisa Sanderson, Marshall’s assignee, took title to the property; Sanderson then transferred title to Innovative Real Estate Strategies, LLC (Innovative), a company owned by both Marshall and Sanderson. After a bench trial, the court determined that the sale of the property violated HESCA and awarded Spencer monetary and exemplary damages against Marshall. We affirmed in Spencer v. Marshall (2008) 168 Cal.App.4th 783.
All further unspecified code sections refer to the Civil Code.
Spencer was unable to collect the entire judgment from Marshall. She filed a second lawsuit against Marshall, Innovative, and IRES, seeking to void the transfer of title of the property to Innovative under the Uniform Fraudulent Transfer Act (UFTA). Marshall and IRES demurred to Spencer’s first amended complaint, which the trial court sustained without leave to amend. The court found that Spencer directly transferred title to Sanderson, who then transferred title to Innovative, and neither Sanderson nor Innovative was a debtor under the UFTA. Thus, the court ruled that Spencer could not void these transactions under UFTA. Spencer appeals and we affirm the lower court’s judgment.
BACKGROUND
Prior Lawsuit
The facts related to the purchase of Spencer’s house are detailed in Spencer v. Marshall, supra, 168 Cal.App.4th 783. Only those facts relevant to this appeal are set forth here.
In 1998, Spencer, a first-time homebuyer, bought a two-bedroom condominium in Hayward. Spencer became delinquent on her mortgage payments to her lender, and filed a Chapter 13 petition on January 8, 2003. On March 12, 2003, the bankruptcy court issued an order confirming Spencer’s Chapter 13 plan, finding that it complied with the provisions of Chapter 13, title 11, of the United States Code. Spencer still owed $170,000 on her home and she fell behind in her postbankruptcy payments to her lender.
Spencer received a mail solicitation from DirectLender, a mortgage company, which stated “payoff your bankruptcy early.” DirectLender made money arranging home loans for people in bankruptcy. Marshall had been president of DirectLender.
Spencer sought to refinance her property with the assistance of DirectLender; an appraisal completed as part of the process valued the property at $290,000. When the refinancing could not be completed, DirectLender, according to Spencer, referred her to Marshall, a licensed real estate broker and the owner and president of IRES, a financing company; he was also the co-owner of Innovative.
According to Marshall, Innovative and IRES are two separate companies.
Spencer contacted Marshall’s office and told Marshall’s staff that she needed $220,000 to pay her creditors through bankruptcy. On August 10, 2004, Marshall provided Spencer with a standard California Association of Realtors Residential Purchase Agreement for the sale of her home for $220,000 to Marshall “[a]nd or Assignee.” Marshall also presented to Spencer for signature a one-year leaseback agreement for $1,500 per month and an option agreement that stated Spencer could repurchase her condominium for $260,000 anytime from October 1, 2004, until September 1, 2005, at which time the option would expire.
On September 15, 2004, escrow closed and Spencer signed a grant deed transferring her property to Sanderson. Sanderson was Marshall’s assignee under the purchase agreement and, according to Marshall, the co-owner of Innovative. Subsequently, Sanderson transferred title to Innovative.
Spencer continued to reside at the Hayward property pursuant to the lease agreement. On June 27, 2005, Marshall sent a letter to Spencer enclosing a notice to pay rent or quit, notifying her that rent for the month of June was past due. At some point before August 11, 2005, Spencer tried to arrange a loan to repurchase the property. According to Spencer, she was advised that she could not qualify for a loan without a “gift of equity” from Marshall. Marshall would not renegotiate the option agreement to provide Spencer with a gift of equity.
Spencer did not repurchase the Hayward residence by September 1, 2005, the date when the option agreement expired. Marshall wrote to Spencer and asked her if she would be willing to repurchase her property for $315,000. Spencer said that she could not pay that much; Marshall listed the property for sale for $369,950.
On October 27, 2005, Marshall served Spencer with a 60-day notice to terminate the tenancy. Spencer served a notice of rescission.
On December 15, 2005, Spencer filed her complaint to quiet title and for compensatory and punitive damages against Marshall and others. She alleged that Marshall violated HESCA when taking title to her condominium. On February 3, 2005, she filed a first amended complaint against IRES, Sanderson, Marshall, and two other companies to quiet title and for specific performance, compensatory damages, and punitive damages. In her first cause of action against Sanderson, Spencer sought rescission of the purchase agreement and to quiet title to the property. She alleged that the form and content of the purchase agreement did not conform with the requirements of HESCA under sections 1695.3 and 1695.5. In her third and fifth causes of action against Marshall and Sanderson, she requested actual and punitive damages, alleging that they transferred and encumbered the property in violation of HESCA under section 1695.6.
Spencer’s second cause of action requested specific performance of her repurchase option under the option agreement. Her fourth cause of action sought alternative money damages in the amount of $50,000 pursuant to an alleged promise by Marshall to pay her that amount in return for her cooperating with the attempted sale of the property. After the first phase of the trial, Spencer dismissed these causes of action.
After a bench trial, the court determined that Marshall was liable for the violations of HESCA because he was the person who structured the terms of the transaction and had the primary dealings with Spencer regarding the property. The court found that Marshall violated section 1695.6, subdivisions (a), (b)(3), and (e) and was an equity purchaser of Spencer’s home.
The court concluded: “In sum, the evidence presented at trial shows that Marshall, through his contacts at DirectLender, was looking to find people in financial distress, in particular, homeowners in bankruptcy like Spencer. Despite Marshall’s reluctance at trial to admit that at the time he entered into the transaction with Spencer he knew that a notice of default had been recorded against the property, the court has no doubt that Marshall was fully aware that he was buying Spencer’s residence on the eve of foreclosure and that he used this circumstance to his own advantage to get a price well below market value. Moreover, even though Marshall knew that Spencer had come to him because she had been unable to qualify for a $220,000 loan, he misled her into believing that by selling the property to him and getting out of bankruptcy, she could then afford, with his help in obtaining financing, to buy back her home. [¶] At least as to their dealings with Spencer, defendants were in every respect the ‘archetypal predators’ that HESCA seeks to regulate.”
The trial court set forth three possible remedies and Spencer chose monetary damages against Marshall. The trial court filed its amended judgment on September 20, 2007. The court entered judgment in favor of Spencer on counts 1, 3, and 5 of her first amended complaint. It awarded her monetary damages against Marshall in the amount of $280,000, representing the sum of actual damages of $70,000 and exemplary damages of $210,000. Pursuant to a stipulation of the parties, the award was reduced by $27,300 for unpaid rent, for a net recovery of $252,700. The court found Spencer to be the prevailing party against all of the defendants for the purpose of awarding attorney fees.
Other options that Spencer rejected were rescission of the purchase agreement and restoration of title to the property to Spencer, subject to an equitable mortgage to Innovative for the sum of $202,827.
Marshall appealed, asserting that Spencer’s sale of the property fell under the exceptions to an equity purchaser under HESCA as set forth in section 1695.1, subdivisions (a)(4) and (a)(5). We rejected Marshall’s arguments and affirmed the trial court’s judgment in Spencer v. Marshall, supra, 168 Cal.App.4th 783.
Current Lawsuit
On December 13, 2007, after being unable to collect on the entire judgment against Marshall, Spencer filed this current lawsuit against Marshall, Innovative, and IRES. She sought to void both the transfer of Marshall’s right to purchase the property to Sanderson and the transfer of the property from Sanderson to Innovative. She alleged that both transfers were fraudulent under section 3439 et seq. and that both transfers were “intended to conceal Marshall’s effective ownership and control of [the Hayward] property.”
The case was assigned to the same trial judge who had heard the earlier underlying action. Marshall filed a demurrer against Spencer’s complaint.
On February 29, 2008, the trial court sustained Marshall’s demurrer to Spencer’s complaint with leave to amend. The court stated that the first cause of action in Spencer’s complaint “alleges only that the transfer of Marshall’s right to purchase the subject property to... Sanderson..., and Sanderson’s subsequent deeding of the home to Innovative..., were made without consideration and were ‘intended to conceal Marshall’s effective ownership and control of Spencer’s property[.]’ Plaintiff does not allege that those transfers were made with an ‘actual intent to hinder, delay, or defraud any creditor of the debtor[.]’ Nor does Plaintiff allege, in the alternative, that the challenged transfers were made under the circumstances set forth in... section 3439.05. [¶] Further, the cause of action does not state facts sufficient to support a finding that the second challenged transfer from Sanderson to Innovative was one ‘by a debtor.’ ”
On March 17, 2008, Spencer filed a first amended complaint against Marshall, Innovative, and IRES to void the transfer of title of the Hayward property. She alleged that Marshall assigned his right to purchase her property “at a sum $70,000 less than the value of said property” to Sanderson and that, “immediately after said loans closed, Sanderson would transfer title without any consideration to” Innovative. She further maintained that both Sanderson and Marshall had a 50 percent interest in Innovative. Sanderson, according to the allegations in the pleading, paid nothing to Marshall for her right to receive a 50 percent interest in the property. Spencer claimed that, after she obtained her judgment against Marshall, title to the Hayward property was transferred to Innovative. The pleading further stated that, although Marshall and Sanderson treated the property as owned by Innovative since October 2004, “as a matter of law said transfer occurred on or about October 11, 2007, due to the provisions of... section 3439.06[, subdivision (a)(1).]” Spencer added the following: “Sanderson’s earlier being the owner of record pursuant to Marshall’s assigning to her his right to purchase the Hayward property is to be disregarded by the court since (a) Sanderson at no time had any attributes of ownership such as receiving the rental income or paying the property taxes or the utilities, and instead all benefits and burdens of ownership were enjoyed by Innovative... and since (b) Marshall himself stated under penalty of perjury that Innovative... became owner of the Hayward property on October 12, 2004....” Spencer again alleged that Innovative “gave no consideration” “for acquiring ownership of the Hayward property.” She asserted that, pursuant to section 3439.05, “said transfer was a fraud on the creditors of Marshall, including plaintiff, and plaintiff is entitled to elect among the remedies set forth” in section 3439.07. Further, she alleged that Marshall was insolvent as a result of the transfer of ownership of the property to Innovative.
The first amended complaint also included a second cause of action for declaratory relief based on a theory that Marshall and IRES were alter egos of one another. Spencer voluntarily dismissed the second cause of action on May 22, 2008.
Marshall demurred to the first amended complaint and IRES joined Marshall’s demurrer. Marshall requested that the court take judicial notice of, among other things, the statement of decision from the prior action between the parties, the amended judgment in that action, the purchase agreement between Spencer and Marshall, the lease between Spencer and Innovative, the option agreement between Spencer and Innovative, the escrow instructions, and the grant deed from Spencer to Sanderson signed on September 15, 2004. The court granted this unopposed request for judicial notice.
In his papers in support of the demurrer, Marshall argued that “Spencer [could not] factually or statutorily support the contention that the court should find that Marshall directly transferred the property to Innovative....” Marshall contended that the court could not ignore that Marshall transferred his right to purchase the property to Sanderson and that Sanderson was not a debtor. Further, since the judgment against Marshall was in September 2007, Marshall maintained that Spencer could not allege that he was a debtor at the time of his assignment of his rights to purchase the property to Sanderson in 2004.
On June 10, 2008, at the hearing on the demurrer, counsel for Marshall and IRES argued that Marshall never took title to the property. Counsel acknowledged that in the prior action the court found Marshall to be the equity purchaser under HESCA, but argued that did not necessarily mean that Marshall was the purchaser under a different statute. Counsel asserted: “I still don’t think you can get past the plain fact that Ms. Sanderson transferred the property to Innovative, and if there is to be any claim for fraudulent transfer against the only debtor in this case, and that is Marshall, it would necessarily have to be limited to the transfer purchase rights from Marshall to Sanderson, and any resulting transfer to Innovative just doesn’t fall into that code section. [¶] Now whether that means [Spencer’s] complaint can be amended to be so limited is one thing, but as written right now, it doesn’t state a claim insofar as it is referring to the ultimate transfer of title to Innovative.”
On July 16, 2008, the trial court filed its order sustaining without leave to amend the demurrer by Marshall and IRES against Spencer’s amended complaint. The court found that Spencer could make a claim under section 3439.05 only as to Marshall’s assignment of his interest in the purchase agreement to Sanderson. The court found that neither Sanderson nor Innovative was a “debtor” for purposes of section 3439.05, since neither was adjudged an “equity purchaser” in the prior action and neither was liable to Spencer on the judgment in that action.
The court rejected Spencer’s argument that it should ignore “Sanderson’s nominal ownership of the Hayward property.” It found that Marshall never held or transferred title to the property to any person or company, but simply assigned his right to purchase the property to Sanderson. Spencer never transferred title to the property to Marshall, but signed a grant deed transferring title directly to Sanderson on September 15, 2004. Further, the court found that, even if it disregarded Sanderson’s nominal ownership of the property as Spencer requested, this would result in a determination that the property was transferred by Spencer directly to Innovate rather than by Marshall to Innovative. The court concluded: “Thus, even if the intermediate transfer of title to Sanderson were to be disregarded by the court as [Spencer] requests, her cause of action amounts to an invalid attempt to challenge her own transfer of title to the property to Innovative rather than a challenge to a transfer by a ‘debtor’ under [section] 3439.05.”
The court refused to permit Spencer another opportunity to amend her pleading for the following reason: “Not only are [Spencer’s] allegations legally deficient to state a cause of action under section 3439.05, but [Spencer] has not met her burden of showing in what manner she could amend the [first amended complaint] that would change the legal effect of the pleading. [Citations.] In her opposition to the demurrer, [Spencer] requested leave to amend to assert that ‘Marshall’s 2004 transfer of half-ownership of the Hayward property to Sanderson was itself a fraudulent transfer....’ As discussed above, however, even if Marshall’s assignment to Sanderson of his right to purchase the property were to be successfully challenged as a fraudulent transfer, this would have no effect on the transfer of title to and ownership of the property to Innovative. Since [Spencer] transferred title to the property directly to Sanderson as part of a transaction in which it was contemplated that ownership would ultimately end up with Innovative, she cannot undo that transfer as a transfer ‘by a debtor’ under section 3439.05 regardless of any irregularities in Marshall’s assignment of his purchase right to Sanderson.”
Entry of judgment in favor of Marshall and IRES was filed on July 29, 2008. Spencer filed a timely notice of appeal. Subsequently, she filed her opening brief in this court. Neither Marshall nor IRES filed a respondent’s brief in this court.
DISCUSSION
On appeal from an order dismissing an action after the sustaining of a demurrer, we independently review the pleading to determine whether the facts alleged state a cause of action under any possible legal theory. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) We give the complaint a reasonable interpretation, “treat[ing] the demurrer as admitting all material facts properly pleaded,” but do not “assume the truth of contentions, deductions or conclusions of law.” (Aubry, supra, at p. 967.) We liberally construe the pleading with a view to substantial justice between the parties. (Code Civ. Proc., § 452; Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1120.)
“ ‘Where the complaint is defective, “[i]n the furtherance of justice great liberality should be exercised in permitting a plaintiff to amend his [or her] complaint....” ’ ” (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at pp. 970-971.) Leave to amend may be granted on appeal even in the absence of a request by the plaintiff to amend the complaint. (Id. at p. 971; see Code Civ. Proc., § 472c, subd. (a).) We determine whether the plaintiff has shown “in what manner he [or she] can amend [the] complaint and how that amendment will change the legal effect of [the] pleading.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) “[L]eave to amend should not be granted where... amendment would be futile.” (Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685.)
In the present case, Spencer maintains that the transfer of the property to Innovative was fraudulent under section 3439.05. She alleged in her first amended complaint that the “court should disregard... Sanderson’s nominal ownership of the Hayward property because she was placed on title not as a true owner,... but only to use her good credit to take out loans, and then immediately transfer ownership to Innovative..., which Sanderson and Marshall always intended to be the owner of the property.” Her pleading insisted that the court “should find that Marshall transferred the Hayward property directly to Innovative....”
The UFTA permits defrauded creditors to reach property in the hands of a transferee. Section 3439.05 under the UFTA provides: “A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.”
A transfer made by a debtor is fraudulent under the UFTA if the debtor made the transfer with the “actual intent to hinder, delay, or defraud any creditor of the debtor.” (§ 3439.04, subd. (a)(1).) Whether a conveyance was made with fraudulent intent is a question of fact, and proof often consists of inferences from the circumstances surrounding the transfer. (Annod Corp. v. Hamilton & Samuels (2002) 100 Cal.App.4th 1286, 1294.) 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.” (§ 3439.05.)
Here, the trial court properly concluded that Marshall did not fraudulently transfer the property to Innovative because Sanderson, not Marshall, transferred title of the property to Innovative. Further, the court noted that it granted Marshall’s request for judicial notice of the grant deed that showed that on September 15, 2004, Spencer directly transferred title of the property to Sanderson. Thus, the court noted that Marshall never had legal title to the property. We agree with the lower court that neither Sanderson nor Innovative was a debtor under section 3439.05 since the prior lawsuit resulted in a judgment only against Marshall. Thus, Spencer cannot state a claim under UFTA to void the transfer of the property between Sanderson and Innovative.
Spencer contends that the lower court sustained Marshall’s demurrer to her first amended complaint on a basis not briefed or mentioned at oral argument. There is no basis for this complaint as counsel for Marshall argued at the hearing on the demurrer that Marshall never had title to the property. Counsel also had requested the court to take judicial notice of the grant deed establishing that Spencer directly transferred the property to Sanderson, Marshall’s assignee under the purchase agreement.
In the lower court, Spencer urged the court to ignore Sanderson’s brief ownership of the property because she “at no time had any attributes of ownership[.]” Spencer cites no authority to support this position and the lower court properly disregarded this argument. Further, Spencer cannot assert that she was unaware that Sanderson was taking title to the property as she directly transferred title of the property to Sanderson.
On appeal, Spencer complains that the current ruling is inconsistent with the lower court’s determination in the prior lawsuit that Marshall was an equity purchaser of the property under section 1695.1, subdivision (a). The definition of an equity purchaser is that the person acquired title in a foreclosure sale. In the prior action, however, no party challenged the issue of title. Marshall, for the purpose of applying HESCA, did not contend that he had not actually purchased the property. Rather, Marshall argued that title was acquired at a sale that satisfied one of the exemptions to the definition of an equity purchaser under HESCA. Similarly, on appeal, Marshall challenged the judgment solely on the basis that the transaction fell under two of the exemptions to an equity purchaser set forth in HESCA. Specifically, he maintained that the transaction was exempted from the requirements of HESCA under section 1695.1, subdivisions (a)(4) and (a)(5). Thus, for the purposes of applying HESCA, the question of whether Marshall actually ever took legal title to the property was never at issue.
We note that Spencer did not raise the issue of collateral estoppel in the trial court or in this court. The elements of collateral estoppel are: “(1) the issue sought to be precluded from relitigation is identical to that decided in the former proceeding; (2) the issue was actually litigated and necessarily decided in the former proceeding; and (3) the party against whom preclusion is sought was a party, or in privity with a party, to the former proceeding.” (People v. Gillard (1997) 57 Cal.App.4th 136, 159.) It appears that the elements of collateral estoppel are not satisfied in the present case. We, however, need not consider this issue because collateral estoppel “must be raised in the trial court by a timely objection [citation] and is waived if not raised below.” (Id. at p. 160; Ponce v. Tractor Supply Co. (1972) 29 Cal.App.3d 500, 508.)
Section 1695.1 reads in relevant part: “The following definitions apply to this chapter: [¶] (a) ‘Equity purchaser’ means any person who acquires title to any residence in foreclosure, except a person who acquires such title as follows: [¶]... [¶] (4) At any sale of property authorized by statute. [¶] (5) By order or judgment of any court....”
Further, as the lower court noted, Spencer never argued at the trial in the prior lawsuit that either Sanderson or Innovative was an equity purchaser. Spencer obtained a judgment only against Marshall in the prior action. Thus, as the lower court explained: “Having sought and obtained a judgment solely against Marshall in the prior action, despite [Spencer’s] knowledge that she transferred title directly to Sanderson as part of the 2004 transaction and that Sanderson was to (and actually did) convey title to Innovative, [Spencer] is not in a position to seek to invalidate those transfers as ‘fraudulent conveyances’ by Marshall.”
The remaining question is whether Spencer can amend her pleading to state a cause of action. She cannot state a claim under UFTA to void her own transfer of the property to Sanderson and she cannot, for the reasons already discussed, set forth a claim under UFTA to void Sanderson’s transfer of the property to Innovative. Rather than argue that she can amend her pleading to state a claim to void these transactions under UFTA, Spencer argues that she should be permitted to amend her pleading to allege that Marshall’s assignment of the purchase contract to Sanderson was a fraudulent conveyance under the UFTA and that Sanderson is an agent of Innovative.
“On its face, the UFTA applies to all transfers.” (Mejia v. Reed (2003) 31 Cal.4th 657, 664.) Section 3439.01, subdivision (i) defines “ ‘[t]ransfer’ ” as “every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, and creation of a lien or other encumbrance.” Thus, UFTA can be applied to Marshall’s assignment of his interest in purchasing the property to Sanderson.
Even if we presume that Marshall’s assignment of his right to the purchase of the property to Sanderson was fraudulent, this would have no consequence. Spencer directly transferred title in the property to Sanderson and she cannot undo her own transaction under UFTA. Additionally, as already stressed, Spencer cannot undo Sanderson’s transfer of the property to Innovative under UFTA because neither Sanderson nor Innovative is a debtor under section 3439.05.
We therefore conclude that Spencer cannot state a claim under section 3439.05 and the lower court did not err in sustaining without leave to amend the demurrer by Marshall and IRES against Spencer’s first amended complaint.
DISPOSITION
The judgment is affirmed. Spencer is to pay the costs of appeal.
We concur: Haerle, Acting P.J., Richman, J.