McKnight v. Faber

• Decision Date: 17 September 1986
• Citation: 185 Cal.App.3d 639,230 Cal.Rptr. 57
• Court: California Court of Appeals Court of Appeals
• Parties: William McKNIGHT, Plaintiff and Appellant, v. Julie FABER, Defendant and Respondent. B017673.

Page 57

230 Cal.Rptr. 57

185 Cal.App.3d 639

William McKNIGHT, Plaintiff and Appellant, v. Julie FABER, Defendant and Respondent.

B017673.

Court of Appeal, Second District, Division 7, California.

Sept. 17, 1986.

Review Denied Dec. 3, 1986.

David L. Brandon and Williams & Furukwa, Los Angeles, for plaintiff and appellant.

Barbara Reinecke, Los Angeles, for defendant and respondent.

LILLIE, Presiding Justice.

Plaintiff appeals from summary judgment entered against him and in favor of defendant Julie Faber.

I FACTUAL AND PROCEDURAL BACKGROUND

In 1975 Melville Faber and Julie Faber, husband and wife, were owners of a residence on which they had recorded a joint declaration of homestead. In 1976 plaintiff sued Melville Faber and others not parties to the within action, for money due on a promissory note and guaranty, and obtained an order for writ of attachment for $50,000 against the Faber residence. In September 1980 Julie Faber filed petition for dissolution of marriage; on November 18, 1980, a stipulated interlocutory judgment of dissolution was entered determining that the family residence is community property and that Julie Faber could reside there with the parties' two minor children through October 1, 1987, after which time the residence was to be sold and the net proceeds divided equally between husband and wife. Husband was to pay the mortgage, taxes, insurance and utility bills on the residence. The dissolution of marriage became final upon entry of final judgment on May 28, 1981.

In November 1981, pursuant to written stipulation and court order in plaintiff's action against Melville Faber, the writ of attachment which had been levied on the property was extended to February 11, 1982. On January 18, 1982, judgment for $70,314.18 was entered in favor of plaintiff and against Melville Faber. On March 11, 1982, Melville and Julie Faber entered into a stipulation to clarify and amend interlocutory judgment of dissolution of marriage and order thereon, pursuant to which Julie Faber was to retain the residence as her sole and separate property; Melville Faber was to receive a promissory note for $69,500 secured by deed of trust on the residence, bearing no interest and due on October 1, 1987, and no longer was to be responsible for making mortgage, tax, insurance, and utility payments on the property as of April 1, 1982. On March 23, 1982, Melville Faber conveyed the residence to Julie Faber by grant deed, and she executed a promissory note for $69,500 secured by deed of trust on the residence in his favor. On March 30, plaintiff recorded abstract of judgment against Melville on his $70,314.18 judgment. On April 6, 1982, an order was entered on the above stipulation in the dissolution action.

In June 1982, plaintiff commenced the instant action against defendants Julie and Melville Faber for declaratory relief (first cause of action), cancellation of fraudulent conveyance and foreclosure (second cause of action), constructive trust (third cause of action), and fraud and deceit--intentional misrepresentation of fact (fourth cause of action). ¹ In June 1982 plaintiff also recorded Julie Faber moved for summary judgment and/or summary adjudication specifying issues that are without substantial controversy and, concurrently therewith, moved to expunge notice of pendency of action. Plaintiff opposed both motions. The court granted motion for summary judgment and motion to expunge notice of pendency of action. On November 8, 1985, summary judgment was entered in favor of Julie Faber and against plaintiff, and order to expunge notice of pendency of action was entered. Plaintiff appeals from summary judgment.

notice of lis pendens against the residence. On February 22, 1985, Julie obtained order expunging notice of lis pendens. Plaintiff petitioned for writ of mandate, and this court upheld the expungement order on the ground that the notice was invalid due to defects in serving and filing the notice (McKnight v. Superior Court (1985) 170 Cal.App.3d 291, 303, 215 Cal.Rptr. 909); however, it stated that plaintiff could refile a notice of lis pendens complying with all requirements of section 409, Code of Civil Procedure. (Ibid.) Accordingly, plaintiff refiled notice of pendency of action in July 1985.

II SUMMARY JUDGMENT

Appellant contends summary judgment was improper as triable issues of fact existed as to each of the four causes of action. In ruling on a motion for summary judgment, the determination whether facts have been adduced which present triable issues of fact is to be made in light of the pleadings. (McCollum v. Friendly Hills Travel Center (1985) 172 Cal.App.3d 83, 89, 217 Cal.Rptr. 919.) The court may examine the pleadings only for the purpose of defining the issues. (Hooks v. Southern Cal. Permanente Medical Group (1980) 107 Cal.App.3d 435, 442, 165 Cal.Rptr. 741.) Summary judgment is proper only if the affidavits in support of the moving party would be sufficient to sustain a judgment in his or her favor. (Parsons Manufacturing Corp. v. Superior Court (1984) 156 Cal.App.3d 1151, 1157, 203 Cal.Rptr. 419.) "Where, as here, the moving party is a defendant he must either negate a necessary element of the plaintiff's case or state a complete defense." (Ibid.) "If a plaintiff's cause of action could be based on either of two theories, he will not be subject to defeat by summary judgment where the defendant's declarations show only that one of the two theories cannot be established." (McCollum v. Friendly Hills Travel Center, supra, 172 Cal.App.3d at p. 90, 217 Cal.Rptr. 919.) "Only if the declarations of the moving defendant considered in light of the issues raised by the pleadings together with the admissions and affirmative allegations set forth in the pleadings of the plaintiff would, standing alone, support the summary judgment motion does the court look to any counteraffidavits and counterdeclarations." (Conn v. National Can Corp. (1981) 124 Cal.App.3d 630, 639, 177 Cal.Rptr. 445.)

III

CANCELLATION OF FRAUDULENT CONVEYANCE (SECOND CAUSE OF ACTION)

The complaint alleged that Melville Faber conveyed real property to Julie Faber "without a fair or any consideration and with the actual intent to hinder, delay, defeat, and defraud the then existing and also future and subsequent creditors of defendant Melville Faber"; that the conveyance "was made in pursuance of an agreement between said defendants to conceal the property of defendant Melville Faber and for the purpose of defrauding, hindering, and delaying his creditors in the settlement and satisfaction of such claims as were then due and owing"; and Melville had no property other than the property conveyed out of which plaintiff can satisfy his claim.

Section 3439.04, Civil Code provides: "Every conveyance made ... by a person who is or will be thereby rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made ... without a fair consideration." " 'Fair consideration' is defined by section 3439.03 of the Civil Code as the exchange of property or the satisfaction of an antecedent debt which is the 'fair equivalent' of the property conveyed.... 'What constitutes "a fair equivalent" or "a fair consideration" under the Fraudulent Conveyance Act must be determined from the standpoint of creditors.... "The test in determining the propriety of a creditor's challenge of a conveyance for lack of a 'fair consideration' within the meaning of the act depends on whether the debtor is thereby rendered execution proof, and the existence of any intent of fraud on the part of either the grantor or the grantee is an immaterial factor." (Hansen v. Cramer (1952) 39 Cal.2d 321. 324-325, 245 P.2d 1059.) "A person is insolvent when the present fair salable value of his assets is less than the amount that will be required to pay his probable liability on his existing debts as they become absolute and matured." (Civ.Code, § 3439.02, subd. (a).)

In support of her motion for summary judgment and/or summary adjudication, Julie Faber presented her declaration stating that she and Melville Faber acquired the real property in April 1975; they recorded a declaration of homestead on the property in September 1975; she filed petition for dissolution of marriage in September 1980; pursuant to an interlocutory judgment of dissolution of marriage, entered November 11, 1980, a Stipulation to Clarify and Amend Interlocutory Judgment for Dissolution of Marriage and Order Thereon was executed by her and Melville on March 11, 1982; plaintiff's action is based on a money judgment obtained on January 18, 1982, in an action on an unsecured promissory note executed by Mel Faber, president, on behalf of Beneficial Concepts, Inc.; on March 23, 1982, Julie Faber executed promissory note secured by deed of trust in the amount of $69,500 payable to Melville Faber who conveyed the property to her by grant deed as her sole and separate property; plaintiff recorded abstract of judgment against the property on March 30, 1982. Attached as exhibits to Julie Faber's declaration are copies of the following documents, of which she sought judicial notice; grant deed, promissory note secured by deed of trust, declaration of homestead, stipulation to clarify and amend interlocutory judgment of dissolution of marriage and order thereon, and unsecured promissory note which was the basis of plaintiff's action against Melville.

Relying on the principle that a deed, as a written instrument, is presumptive evidence of a consideration (see Civ.Code, § 1614), defendant argued below that the consideration for the transfer was evidenced by the promissory note in the amount of $69,500, and that Melville Faber was not rendered insolvent since the sum of $69,500 will be due and payable to him on October 1, 1987. As a rebuttable presumption affecting the burden of proof (see Civ.Code, § 1615; Evid.Code, § 605), the presumption of Civil Code section...