Judge: Douglas W. Stern, Case: 20STCV09022, Date: 2023-04-03 Tentative Ruling

Case Number: 20STCV09022    Hearing Date: April 3, 2023    Dept: 68

Andrea Goffredo Favilli vs. Hans Tung, et al., Case No. 20STCV09022

Motion to Vacate Judgment and Enter Different Judgment

Motion for New Trial

Moving Party – Plaintiff Andrea Goffredo Favilli

Responding Parties – Defendants Hans Tung and Fang Yu Huang; joined by Defendants USA National Title Company, Olga Stavro, and Marco Favilli

            This case arises out of a sale of real property owned by Plaintiff Andrea Favilli, his brother Marco Favilli and sister Olga Stavro.  The three owners decided to sell the property.  Plaintiff and his siblings intended that sale.  Defendants Hans Tung and Fang Yu Huang were the buyers.  Plaintiff understood that fact.  The parties all knew that the three owners intended to sell the property to Tung and Huang at the agreed price set forth in the various sale documents.  The sale was consummated.  Tung paid the purchase price.  The “deed” was delivered.  It appeared that everything occurred as every party to the transaction, including Andrea Favilli, intended.

            But there was a problem.

            What has led to this litigation are two facts.  The first is that once the sale was concluded, Olga Stavro and Marco Favilli failed to deliver to Andrea his 1/3 of the net proceeds.  Andrea Favilli wanted his 1/3 and believed that his sister and brother had not legitimate right to not have him receive his 1/3.  (Andrea testified that he would not have filed this action if he had gotten his 1/3.)

The second fact germane to this dispute is that everyone had (incorrectly) assumed that title remained in the name Trustee, Olga Stavros – and therefore she was capable of signing the grant deed to convey the property.  In fact, title had years earlier been transferred to Andrea, Marco and Olga and therefore each should have signed to convey their undivided 1/3 interests.

            Judge Mooney heard all the evidence.  His Statement of Decision details what he found factually and the law that he then applied to reach the determination.  He ruled that, as intended by everyone, the sale should be “corrected” so that buyer Hans Tung is the owner of the property.

            Plaintiff Andrea Favilli contends that the facts found by Judge Mooney are insufficient to allow the Court to reach the legal outcome decreed by the Court.

Analysis

I.                   Motion to Vacate Judgment and Enter Different Judgment

CCP Section 663 requires that to set aside a judgment in a nonjury trial there must be an “[i]ncorrect or erroneous basis for the decision, not consistent with or not supported by the facts”. (CCP § 663 (1).) A motion under Section 663 does not allow the court to reweigh the facts. It lies only on the basis of uncontroverted evidence. (Simac Design, Inc. v. Alciati (1979) 92 Cal.App.3d 146, 153; Forman v. Knapp Press (1985) 173 Cal.App.3d 200, 203 (A motion to vacate is not intended as a means to challenge all of the court’s evidentiary rulings but is limited to incorrect legal conclusions or an erroneous judgment based upon uncontroverted facts).)

Cal. Civ. Code Section 3399 states: “When, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of the party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value.” Further, “in revising a written instrument, the Court may inquire what the instrument was intended to mean, and what were intended to be its legal consequences, and is not confined to the inquiry what the language of the instrument was identified to be.” (Cal. Civ. Code § 3401.)

The remedy of reformation for mistake is not restricted to the exact situations stated in Section 3399. (Jones v. First American Title Ins. Co. (2003) 107 Cal.App.4th 381, 388 (reforming deed to add a new party).)

In Panterra, the court of appeal held that Section 3399 permitted a contract to be reformed to add a new party, reasoning as follows:

However, Civil Code section 3399 permits reformation of a contract upon application of any aggrieved party. Under this statute, “[t]he right to reformation of an instrument is not restricted to the original parties to the transaction [citation].” (Shupe v. Nelson (1967) 254 Cal.App.2d 693, 698; Watson v. Collins (1962) 204 Cal.App.2d 27, 32.) Thus, “the proposition that a person cannot be made a party to a written instrument by reformation is an overstatement.” (5 Witkin, Cal. Procedure (5th ed. 2020) Pleading, § 805.) “No ‘new contract’ is made when the plaintiff, on a proper showing of … mistake, asks to have the writing conform to the original oral agreement” concerning the parties to the contract. (Ibid.)

(Panterra GP, Inc. v. Superior Court (2022) 74 Cal.App.5th 697, 714.)

            In this case, the facts found at trial show that the understanding of the parties was that Plaintiff and his siblings were selling the property to Defendants Tung and Huang. The deed had shown that the property was being sold by the Trust to which Plaintiff and his siblings were the beneficiaries, and that Defendant Olga had signed it in her capacity as trustee. The property had previously been transferred from the Trust to the three siblings. Therefore, the deed should have been prepared for Olga and her siblings to execute to convey the 1/3 interest each held. This Court opted to reform the deed so that the transaction actually intended complied with the necessary requirements to have the recorded deed convey the interests as they had actually existed, rather than as everyone assumed their respective interests were held.

Based on the above statutes and case law, this was a proper action for the Court to take. The parties had intended for the deed to reflect the fact that the siblings were selling the property to Defendants Tung and Huang. It was because of their mistake that the deed showed otherwise. It was within the power of the Court to reform the deed to reflect the intention of the parties.

Plaintiff also makes the argument that Defendants Tung and Huang had a legal duty to search property records before signing the deed. Plaintiff had not made this argument prior to this motion, in his Answer to Defendants’ First Amended Cross-Complaint or otherwise, so it is unnecessary for the Court to address this argument.

Accordingly, Plaintiff’s motion to vacate judgment and enter a new judgment is DENIED.

II.                Motion for New Trial

            Plaintiff conditioned his motion for new trial on the granting of his motion to vacate and enter different judgment. The Court is denying his motion to vacate and enter different judgment, so Plaintiff’s motion for new trial is also DENIED.

ORDER

1.      Plaintiff Andrea Goffredo Favilli’s Motion to Vacate Judgment and Enter Different Judgment is DENIED.

2.      Plaintiff Andrea Goffredo Favilli’s Motion for New Trial is DENIED.