Cortez v. Vogt

• Decision Date: 10 February 1997
• Docket Number: No. D021806,D021806
• Citation: 60 Cal.Rptr.2d 841,52 Cal.App.4th 917
• Parties: , 97 Cal. Daily Op. Serv. 1003, 97 Daily Journal D.A.R. 1409 Manuel CORTEZ, Plaintiff and Appellant, v. William VOGT et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

Page 841

60 Cal.Rptr.2d 841

52 Cal.App.4th 917, 97 Cal. Daily Op. Serv. 1003,

97 Daily Journal D.A.R. 1409

Manuel CORTEZ, Plaintiff and Appellant, v. William VOGT et al., Defendants and Respondents.

No. D021806.

Court of Appeal, Fourth District, Division 1, California.

Feb. 10, 1997.

Rehearing Denied March 11, 1997.

Review Denied April 30, 1997.

Phillips, Campbell, Haskett, Noone & Ingwalson, Frederick C. Phillips, San Diego, Davis, Reno & Courtney, Alan C. Davis, Cindy O'Hara, Laurie Erdman and Andrean Kalemis, San Francisco, for Plaintiff and Appellant.

Luce, Forward, Hamilton & Scripps, Lawton Law Firm, Dan Lawton and Kelly Capen Douglas, San Diego, for Defendants and Respondents.

NARES, Associate Justice.

Under the Uniform Fraudulent Transfer Act (UFTA), embodied in CIVIL CODE SECTION 3439¹ et seq., on April 30, 1993, Manuel Cortez filed an action against William Vogt, Betty Vogt and Doe defendants (collectively, the Vogts) seeking to set aside an alleged fraudulent transfer occurring in August 1987. On May 20, 1994, the trial court granted summary judgment in favor of the Vogts, finding the complaint is barred by the statute of limitations set forth in section 3439.09.

Cortez appeals, contending (1) the four-year statute of limitations of section 3439.09 was tolled during the pendency of an appeal in the underlying action for wrongful termination against two corporations which were merged into another corporation during the underlying action with the assets ultimately being transferred to a corporation that did not assume the then-unsettled, but potential liability; (2) the one-year statute of limitations of section 3934.09, subdivision (a), did not begin to run until the debtor examination of William Vogt in March 1993, after the judgment against the corporations in the underlying action was final; and (3) the Vogts should be equitably estopped from asserting the statute of limitations defense.

Section 3439.09, subdivisions (a) and (b) provide in part that an action by a creditor against a debtor for relief against a transfer or obligation under the UFTA is extinguished unless the action is brought "within four years after the transfer was made or the obligation was incurred." Section 3439.09, subdivision (a) also provides for a longer statute of limitations of one year after the transfer was or reasonably could have been discovered if the transfer was made with the intent to hinder, delay or defraud any creditor. Section 3439.09, subdivision (c) provides that notwithstanding any other provision of In the context of the scheme of law of which section 3934.09 is a part, where an alleged fraudulent transfer occurs while an action seeking to establish the underlying liability is pending, and where a judgment establishing the liability later becomes final, we construe the four-year limitation period, i.e., the language, "four years after the transfer was made or the obligation was incurred," to accommodate a tolling until the underlying liability becomes fixed by a final judgment. Thus, in this case the four-year period did not commence to run until the judgment became final in April 1990. Accordingly, the present action under the UFTA, filed in April 1993, was timely under the four-year provision and summary judgment should not have been granted on this basis.

law an action with respect to a fraudulent transfer is "extinguished if no action is brought or levy made within seven years after the transfer was made or the obligation was incurred."

Since the foregoing conclusion requires reversal of the summary judgment, we do not address Cortez's claim that the later one-year statute of limitations did not begin to run until March 1993 or Cortez's estoppel claim which, in any event, was not ruled on by the trial court.

FACTS

The Underlying Action

On September 19, 1984, Cortez filed a wrongful termination action against Telecheck Golden Gate, Inc. (Telecheck), a point-of-sale check verification company, all the shares of which were owned by the Vogts. (Alameda County Super. Ct. case No. 588925-9, hereinafter, Cortez I ) Cortez had been terminated as a general manager of Telecheck in May 1984, after moving from Colorado to California and spending less than one year on the job. His action also named as defendants William Vogt, La Touche, Ltd. (a management company for all of the Vogts' companies, also owned and controlled by Vogt), and other officers and affiliated businesses of Telecheck.

Merger of Original Defendants in Cortez I

In late 1985, before the trial in Cortez I, Telecheck and La Touche, Ltd., were merged into VMC-Telecheck, Inc. (VMC), which was incorporated on August 26, 1985. ² William Vogt is the chairman and chief executive officer of VMC, which is a franchise of Telecheck Services, Inc. The Vogts are the sole shareholders of VMC.

Notice to Cortez of Merger of Original Defendants

On December 23, 1985, a declaration notifying Cortez of the merger of Telecheck and La Touche into VMC was served on Alan C. Davis, Cortez's counsel in Cortez I. Raymond T. Nogueira, VMC's president, declared in part that since the incorporation of VMC in August 1985, the operation of "La Touche Ltd. [and] Telecheck Golden Gate ... [were] taken over by VMC-Telecheck, Inc.," and "I was the President of La Touche Ltd. from January 1985 until ... December, 1985."

In June 1987, Cortez filed a second amended complaint naming VMC as a defendant in Cortez I.

VMC Sale to McDonnell Douglas

On August 14, 1987, VMC and several other entities owned or connected with the Vogts sold their assets to McDonnell Douglas Corporation for a gross price of approximately $12 million. ³

Notice to Cortez of VMC Sale to McDonnell Douglas

On February 18, 1988, in a deposition taken of Cortez for Cortez I, counsel for the defendants introduced Cortez and his counsel So far as the record shows, the first direct notice to Cortez of the 1987 sale of VMC to McDonnell Douglas occurred in a March 1993 debtor's examination of William Vogt in connection with the underlying action. ⁵

                to a Mr. Greg Jones with the statement he was "the human resources manager for McDonnell Douglas Corporation, which has recently acquired some or all of the Telecheck entities."   In a deposition for the present action, Cortez testified it was during this February 1988 deposition that he first "had an indication" there had been a sale of VMC and/or the Telecheck assets to McDonnell Douglas, that he recalled at the deposition "opposing counsel introduced [Jones] as a representative of McDonnell Douglas because some assets and liabilities, or a combination of both, I don't recall the exact terms, had been sold to McDonnell Douglas and he was there representing their interests," that he "arrived at no conclusion" on the matter of assets and liabilities of [52 Cal.App.4th 922] VMC and/or the Telecheck entities having been transferred to McDonnell Douglas, and that he did not know "what BBV is." 4
                

Judgment against Telecheck and La Touche, Ltd. in Cortez I

On July 25, 1989, a judgment of nonsuit was entered in favor of William Vogt individually in Cortez I.

On November 7, 1989, a judgment was entered after a jury trial, awarding Cortez approximately $93,000 in his wrongful termination action against Telecheck and La Touche, Ltd. only.

On November 15, 1989, Telecheck and La Touche, Ltd. filed a notice of appeal from the judgment.

On April 12, 1990, the Court of Appeal dismissed the appeal of Telecheck and La Touche, Ltd., for their having failed to procure the record on appeal within the time limits allowed or any extensions, and for their having failed to apply for relief from default. Thus, the judgment against Telecheck and La Touche became final.

Cortez's Efforts to Locate Assets

In December 1989, after the judgment in Cortez I, Cortez's attorney's office contacted the Secretary of State by telephone and was told that in 1985 Telecheck and La Touche, Ltd. had merged into VMC. The attorney was also told that in 1987 VMC had changed its name to BBV Liquidating Co.

In March 1990, an investigator for Cortez's attorney issued a California and Nevada asset search report on BBV Liquidating Co., VMC and the judgment debtor companies.

The investigator confirmed the information from the Secretary of State about the merger of Telecheck into VMC and reported there were insufficient assets of the two judgment debtor companies or their successors to satisfy the judgment. Only one checking account averaging in the medium four-figure range was found for BBV Liquidating Co.

The March 1990 investigator's report noted the merger on November 27, 1985, of Telecheck Golden Gate, Inc. with VMC Telecheck, Inc., and the latter's August 14, 1987, change of its corporate name to BBV Liquidating Co. The report further noted that La Touche, Ltd. had on December 2, 1985, also merged with VMC Telecheck, Inc., which later merged with BBV Liquidating Co. The report stated that there apparently were a number of companies operating throughout California with the name Telecheck or variations of that name, and that a specialized investigation would be required to determine whether any of them related to BBV Liquidating Co.

In January 1991, the same investigator issued a report on assets of the Vogts.

In August 1991, Cortez's attorney learned by telephone from the Secretary of State that the successor company, BBV Liquidating, Inc., was not in good standing and had been suspended for failure to comply with the requirements of the Franchise Tax Board.

In January 1992, Cortez's attorney received additional asset reports on the above-mentioned companies and the Vogts, with essentially the same results as the earlier reports. Except for one parcel of real property and one bank account held by the Vogts, no assets were found. The report includes the following statements:

"Please note that sources report that the corporation VMC Telecheck, Inc. may no longer be operating in San Diego...