Hsieh v. Hsieh
| Decision Date | 02 March 2015 |
| Docket Number | B250938 |
| Court | California Court of Appeals Court of Appeals |
| Parties | CHIH WU HSIEH, Plaintiff and Appellant, v. YANNIK HSIEH, Defendant 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. GC047528)
APPEAL from a judgment of the Superior Court of Los Angeles County, Jan A. Pluim, Judge. Reversed and remanded with directions.
Law Office of J. Jay Chang, Jye Chang; Murtagh & Associates and Paul G. Murtagh for Plaintiff and Appellant.
Law Offices of Mark J. Warfel and Mark J. Warfel for Defendant and Respondent.
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Chih Wu Hsieh (Chih)1 appeals from a judgment in favor of his son, Yannik Hsieh, also known as Jason Hsieh (Jason), entered after the trial court found his action alleging a fraudulent transfer was barred by the statute of limitations under the Uniform Fraudulent Transfer Act (UFTA; Civ. Code, § 3439 et seq.).2 This case arises out of the transfer of over $5 million in community property by Chih's former wife, Jui Chih Wang Hsieh, also known as Ruth Jui Chih Hsieh (Ruth), to the couple's sons, Jason and John Hsieh (John). On appeal, Chih contends that the statute of limitations only started to run once he obtained a judgment in 2010 in a family court separation action awarding him 100 percent of the marital community property as his separate property, and therefore this action filed in 2011 was timely.
At the heart of this case is whether California's adoption of the UFTA in 1986 supplemented or replaced the prior common law remedy to redress fraudulent conveyances.3 Chih contends that the common law cause of action survives, citing to post-UFTA decisions in Cortez v. Vogt (1997) 52 Cal.App.4th 917 (Cortez) and Macedo v. Bosio (2001) 86 Cal.App.4th 1044 (Macedo). In Cortez and Macedo, our colleagues in the Fourth and First Districts, respectively, held that the statute of limitations applicable to common law fraudulent conveyance claims applied and that the limitations period started to run when the plaintiff obtained a judgment. Jason argues that Cortez andMacedo do not apply to Chih's claims and that the trial court correctly applied the UFTA statute of limitations to bar Chih's action.
We find that the UFTA was intended to supplement the common law remedy for fraudulent conveyance and follow the reasoning of our colleagues in the First and Fourth Districts. While a plaintiff under the UFTA is not required to wait until he or she has a judgment in order to file an action to set aside a fraudulent transfer, we find that if the plaintiff opts first to obtain the judgment, the subsequent action for fraudulent transfer is not barred if brought in a timely manner thereafter.
We reverse and remand with instructions to the trial court.
Chih and Ruth were married in 1966. As of 1997, Chih was living in Taipei and Ruth was living in the United States. On September 22, 1997, Ruth filed a petition for legal separation (1997 separation action) and, on November 12, 1998, she filed a petition for dissolution of marriage (1998 dissolution action).
Chih cannot speak, read, or write English. Ruth is fluent and can read and write in English. Ruth regularly sent documents written in English to Chih in Taipei for his signature. Chih trusted Ruth and did not have the documents translated before he signed them. At Ruth's request, Chih signed a blank notice of acknowledgment and receipt for service of summons and petition for legal separation, but he did not know what he was signing.
Ruth did not serve Chih with the summons and petition in either the 1997 or 1998 actions. Nor did she notify Chih of the actions. As a result, Chih did not appear in eitheraction and, at sometime prior to 2000, Chih's defaults were taken in both actions and default judgments were entered.
During the period from August 16, 2001 through August 21, 2006 Ruth made 14 wire transfers totaling $1,444,500 to Jason's bank account in Hong Kong. Chih later learned of Ruth's actions and on September 7, 2006 moved to set aside the defaults and default judgments. On that date, on an ex parte basis, the court reinstated the automatic temporary restraining orders (ATROs) in both actions as to "any remaining assets." Ruth was served with the motions and the ATROs. Chih also recorded a lis pendens on the property located at 2014 El Sereno Avenue in Arcadia on September 11, 2006. At some point in 2006, the default and default judgments were vacated and the two actions were reinstated.5
From September 13 through October 17, 2006, Ruth liquidated $3,950,000 in community property stocks. She transferred $3,330,000 of the proceeds to Jason in Hong Kong, $120,000 to her godson in Taipei, and $500,000 to her own bank accounts.
On November 17, 2006, Ruth transferred the El Sereno Avenue property to herself as trustee of the JC Hsieh Living Trust. In August 2007, Ruth sent Chih a deed to the El Sereno Avenue property for his signature with the intent to transmute Chih's community interest in the property to Ruth's separate property. Ruth did not inform Chih of the legal significance of the document. As was the parties' custom, Chih signed the document without having it translated. Chih was unaware of the legal significance of the document and had no intention of giving Ruth his interest in the El Sereno Avenue property.
Also in 2007, Ruth obtained a $650,000 loan secured by a deed of trust on the El Sereno Avenue property. She sent $645,000 of the proceeds to Jason in Hong Kong. Ruth also disposed of an additional $300,000 in community property.
On August 7, 10 and 11, 2009, the court held an evidentiary trial in the 1997 separation action. Ruth failed to appear at trial, and her "[p]etitions in each case were stricken."6 Chih obtained a judgment in the 1997 separation action on January 7, 2010. The family law court ordered Ruth to pay Chih 100 percent of the amount of community property funds transferred to Jason pursuant to Family Code section 1101, subdivision (h), finding the transfers were made in violation of the ATROs and in breach of Ruth's fiduciary duties, and that Ruth's actions were malicious, oppressive and fraudulent.7 The property interest was also awarded to Chih "as his sole and separate property."
The court also held that the El Sereno Avenue property was community property and awarded it to Chih. It found the purported transmutation of the property was invalid and violated the ATROs, and that Ruth's actions breached her fiduciary duties and were malicious, oppressive and fraudulent. The court likewise awarded the property to Chih as his sole and separate property.
Chih filed this action against Ruth, Jason and John on June 10, 2011 alleging causes of action for fraudulent transfer and conversion.8 Jason answered and denied all the allegations of the complaint. He alleged 16 affirmative defenses, including that the action was barred by the statutes of limitations set forth in Code of Civil Procedure sections 337, 338 and 339. Notably, Chih does not allege in his complaint that the action was brought under the UFTA; neither does Jason assert as an affirmative defense the statute of limitations under the UFTA.
The court bifurcated trial as to Jason's statute of limitations defense, which trial was held on April 22, 2013. At trial, the court framed the issue as whether the action was barred by the statute of limitations contained in the UFTA under section 3439.07, subdivision (a). Both counsel argued their position as to whether the holding by the Fourth District in Cortez applied to toll the statute of limitations. Counsel for Jason argued that Cortez was inapplicable because at the time of the transfers there was no pending action as a result of entry of default judgments in both the 1997 separation action and the 1998 dissolution action. Counsel for Chih argued that under the subsequent holding by the First District in Macedo, no pending action was necessary to toll the statute of limitations. Quoting from Macedo, he argued that a fraudulent conveyance 9 (Macedo, supra, 86 Cal.App.4th at p. 1051.)
In its statement of decision, the court held section 3439.09, subdivision (a), provided the applicable statute of limitations of "four years after the transfer was made orthe obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant." In reaching this holding, the court adopted the argument made by Jason's counsel, stating that it
The court concluded that because the complaint was filed on June 10, 2011, The court also...
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