Judge: Michael C. Kelley, Case: 19AVCV00879, Date: 2022-09-15 Tentative Ruling

Case Number: 19AVCV00879    Hearing Date: September 15, 2022    Dept: A15

Background

This automobile accident case was filed on November 25, 2019, by Plaintiff Alan Lee (“Plaintiff”) against Defendant Raymundo Mondragon (“Defendant”) regarding a collision that occurred on the night of August 24, 2019. Plaintiff was stopped at the intersection of 35th Street and Avenue R, in the city of Palmdale, when Defendant collided with Plaintiff’s vehicle.

Plaintiff asserts four causes of action against Defendant for (1) negligence, (2) motor vehicle negligence, (3) negligence per se under Vehicle Code section 23152, and (4) negligence per se under Vehicle Code section 23153.

On June 9, 2022, Plaintiff filed the instant Application for Leave to File First Amended Complaint as an ex parte application. At the ex parte hearing, the Court set the matter for a regularly-noticed hearing. (Min. Ord., dated Jun. 10, 2022.) Defendant has filed a timely opposition. Plaintiff has not filed a reply.

Analysis

Motion for Leave to Amend —"The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect[.]” (Code Civ. Proc., § 473, subd. (a).) It may grant leave to amend at any stage of the proceeding, even “after commencement of trial.” (Id., § 576; see Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 488-489.)

“Ordinarily, courts should ‘exercise liberality’ in permitting amendments at any stage of the proceeding.” (Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1159.) This principle is “in keeping with the fundamental policy of our courts that cases should be decided on their merits.” (Hirsa v. Super. Ct., supra, 118 Cal.App.3d at 490.)

“The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified.” (Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428.) In fact, if a denial of leave to amend deprives a party of “the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion.” (Morgan v. Superior Court of Cal. In and For Los Angeles County (1959) 172 Cal.App.2d 527, 530.) 

However, one of the few justifications for denying a motion for leave to amend is if the proposed amendments are barred as a matter of law. (Yee v. Mobilehome Park Rental Review Bd. (City of Escondido) (1998) 62 Cal.App.4th 1409, 1429.) It must appear “to a certainty that no relief could possibly be granted under the amended pleading.” (Robinson & Wilson, Inc. v. Stone (1973) 35 Cal.App.3d 396, 413.)

Here, Plaintiff seeks to amend his complaint to add Defendant’s wife, Adriana Barbarin (“Barbarin”), as a defendant; and to assert fifth and sixth causes of action for fraudulent transfer and conspiracy to commit fraud, respectively, against Defendant and Barbarin.

Plaintiff’s proposed causes of action are based on Defendant and Barbarin’s joint ownership and possession of the real property located at 3217 East Avenue R-4 (the “Property”), in the city of Palmdale. Plaintiff alleges Defendant and Barbarin recorded a grant deed on February 3, 2020, to change the ownership of the Property from their joint ownership to Barbarin’s sole ownership. He alleges they made this change to protect the Property from being collected to satisfy Plaintiff’s potential, future judgment in this matter. He implies that Defendant likely foresees that he will be subject to civil liability in this action, since he has already pled guilty to driving under the influence with respect to this same car accident.

Defendant opposes Plaintiff’s motion on the ground that Plaintiff cannot succeed on the proposed causes of action, as a matter of law.

Proposed Cause of Action for Fraudulent Conveyance

A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim. However, a conveyance will not be considered fraudulent if the debtor merely transfers property which is otherwise exempt from liability for debts. That is, because the theory of the law is that it is fraudulent for a judgment debtor to divest himself of assets against which the creditor could execute, if execution by the creditor would be barred while the property is in the possession of the debtor, then the debtor's conveyance of that exempt property to a third person is not fraudulent.

(Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13.)

In Weisenburg v. Cragholm (1971) 5 Cal.3d 892, our Supreme Court held that, in an action for fraudulent conveyance, the creditor could not succeed on the cause of action when the basis for debt was extinguished. Specifically, the plaintiff had been awarded a judgment against the defendants after prevailing on an action for foreclosure. (Id., 895-897.) While the foreclosure action was pending, but before the judgment was entered, the defendants conveyed real property in a transaction that the plaintiff suspected was fraudulent. After the foreclosure judgment was entered, the plaintiff filed an action for fraudulent conveyance as to the suspicious transfer. The plaintiff alleged that the transfer was “made for the purpose of hindering, delaying, and defrauding him of his rights as a judgment creditor” of the defendants. (Id., 895.) The trial court rendered the judgment on the fraudulent conveyance claim in the plaintiff’s favor.

However, the defendants appealed the fraudulent conveyance judgment, and while that appeal was pending, the foreclosure judgment was reversed on appeal. (Weisenburg v. Craigholm, supra, 5 Cal.3d at 895.)

The Supreme Court held that the foreclosure judgment had formed the basis for the trial court’s finding in the fraudulent conveyance action that the plaintiff was the defendants’ creditor. Therefore, when the foreclosure judgment was reversed, the reversal eliminated the basis for finding that the plaintiff was the defendants’ creditor, and it was as if the foreclosure judgment “had never been entered.” (Weisenburg v. Craigholm, supra, 5 Cal.3d at 896.) Subsequently, the fraudulent conveyance judgment would also need to be reversed.

This case suggests that Plaintiff cannot assert a cause of action for fraudulent conveyance against Defendant or Barbarin, because he is not yet Defendant’s creditor. Plaintiff is not yet Defendant’s creditor because, without an actual judgment, there is no basis for his creditor status. If he is not a creditor, he cannot succeed on a claim of fraudulent conveyance.

Therefore, Plaintiff cannot assert this cause of action as a matter of law.

Proposed Cause of Action for Conspiracy to Commit Fraud

“The elements of a civil conspiracy are (1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 212.)

In Plaintiff’s proposed First Amended Complaint, he alleges that Defendant and Barbarin agreed to transfer the Property in an act of fraud. However, since Plaintiff cannot, as a matter of law, succeed on his proposed cause of action for fraudulent conveyance, said conveyance also cannot support a cause of action for conspiracy. The conveyance was not a tortious act because Plaintiff is not yet Defendant’s creditor; similarly, Plaintiff suffered no damages because he is not yet Defendant’s creditor. He has no claim to the Property.

Therefore, Plaintiff cannot assert a cause of action for conspiracy to commit fraud, either.

(As the Court has reached its ruling based on Plaintiff’s inability to establish that he is Defendant’s creditor, it need not address Defendant’s alternative argument that the Property is protected by the Homestead Exemption.)

Conclusion