Judge: Theresa M. Traber, Case: 20STCP00431, Date: 2024-03-04 Tentative Ruling
Case Number: 20STCP00431 Hearing Date: March 4, 2024 Dept: 47
FANNIE MAE V.
GUSTAVO M. UNGO, ET AL., Case No. 20STCP00431
TENTATIVE RULINGS
ON MOTIONS IN LIMINE AND MOTION TO COMPEL COMPLIANCE
PLAINTIFF’S MOTION TO
COMPEL COMPLIANCE WITH TRIAL SUBPOENAS
RULING:
GRANTED. Defendants are to
provide at the start of trial a comprehensive list of the documents they have
that are responsive to Plaintiff’s subpoenas, to allow for a final ruling on
what Defendants are obligated to produce.
These documents shall be produced to the Court’s judicial assistant in a
sealed envelope to be held during the pendency of the trial and disclosed only after,
and if, the jury finds a predicate for awarding punitive damages in this case.
PLAINTIFF’S MIL #1 – to exclude all evidence or testimony
inconsistent with the Court’s summary adjudication ruling.
RULING: GRANTED
IN PART and DENIED IN PART.
Having
already succeeded on its claims for constructive fraud, Plaintiff seeks to
prevail at trial on its claims for actual fraud under Civil Code §
3439.04. Section 3439.04 provides: “A
transfer made or obligation incurred by a debtor is fraudulent as to a
creditor, whether the creditor's claim arose before or after the transfer was
made or the obligation was incurred, if the debtor made the transfer or
incurred the obligation as follows: [¶] (a) With actual intent to hinder,
delay, or defraud any creditor of the debtor. [¶] (b) Without receiving a
reasonably equivalent value in exchange for the transfer or obligation, and the
debtor: [¶] (1) Was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor were unreasonably
small in relation to the business or transaction; or [¶] (2) Intended to incur,
or believed or reasonably should have believed that he or she would incur,
debts beyond his or her ability to pay as they became due.” “Section 3439.04 is construed to mean a
transfer is fraudulent if the provisions of either subdivision (a) or
subdivision (b) are satisfied.” (Annod
Corp. v. Hamilton & Samuels (2002) 100 Cal. App. 4th 1286, 1294.)
Through its MIL #1, Plaintiff asks
that the Court bar admission of any evidence contrary to the Court’s findings
granting summary adjudication on the constructive fraud claims. As explained below, the Court has already
decided, based on undisputed evidence: that Plaintiff is a creditor of Gustavo
Ungo Sr. (“Senior”) and the Trust pursuant to a February 10, 2017 Judgment
Based on Sister-State Judgment; that the relevant transfers of the subject
properties were effective on August 28, 2018, August 31, 2018, September 4,
2018, October 23, 2018, and February 26, 2019; and that the Trust conveyed the
properties without receiving a reasonably equivalent value in exchange for the
transfer.
In the
context of litigating the motion for summary adjudication, Defendants raised no
dispute regarding Plaintiff’s status as a creditor of Senior and the
Trust. As they have no evidence to
contest this status, the question cannot be submitted to the jury who should be
instructed that this fact is established.
The Court has already made findings
about the effective transfer dates for each of the subject properties based on
its ruling about the standards to be applied to determine when a transfer is
made under the Uniform Voidable Transactions Act. A transfer is made under the UVTA:
With respect to an asset that is real property other than a
fixture, but including the interest of a seller or purchaser under a contract
for the sale of the asset, when the transfer is so far perfected that a good
faith purchaser of the asset from the debtor against which the applicable law
permits the transfer to be perfected cannot acquire an interest in the asset
that is superior to the interest of the transferee.
(Civ. Code § 3439.06(a)(1).) Under well-settled precedent, a
transfer is perfected for the purposes of the UVTA when notice of the transfer
is recorded. (See, e.g., Fujifilm Corp. v. Yang (2014) 223 Cal.App.4th
326, 336.) This ruling will be applied during the trial of
Plaintiff’s claims for actual fraud under Civil Code § 3439.04(a)(1), just as
it was found to govern Plaintiff’s constructive fraud claims under Civil Code
§§ 3439.04(a)(2) and 3439.05 in connection with the summary judgment
motion. As there is and can be no
dispute about the dates on which the transfer documents were recorded, this
element is plainly established and cannot be presented for resolution by the
jury.
The
Court has also resolved the question of whether collateral estoppel bars
Defendants from relitigating the question of whether the Trust became
irrevocable on January 4, 2007, making its assets inaccessible to Judgment
Debtor Senior and, thus, to Judgment Creditor Plaintiff. As they did in opposition to the summary
adjudication motion, Defendants want to argue at trial that the 2007 execution
dates, rather than the later recording dates, are the relevant touchstones
because the Trust became irrevocable upon the death of Emilia Ungo on January
4, 2007, pursuant to the Third Amendment to the Trust, and this change in the
character of the Trust rendered its assets beyond the enforcement efforts of
Plaintiff. Plaintiff’s rejoinder is that
these contentions are barred by the doctrine of collateral estoppel because the
revocability of the Trust was litigated and resolved in a prior action entitled
Fannie Mae v. Gustavo M. Ungo and Jane Doe Ungo, Case No. BS168101 (the
“Enforcement Action”) and that, in any event, Plaintiff can access the Trust
assets because Ungo Senior, as Trustee, was made a judgment debtor in the
Enforcement Action, so the Trust’s assets may be accessed directly by Plaintiff
under the judgment against the Trust.
The
parties have already exhaustively litigated the collateral estoppel question of
whether the trial court’s ruling in the Enforcement Action that the Trust was
revocable bars its relitigation in this action, both in the context of
Plaintiff’s motion for summary adjudication and Defendant’s motion for
reconsideration. The Court concluded
that collateral estoppel principles must be applied to prohibit relitigation of
the revocability issue in this action.
This ruling applies to the constructive fraud claims as to which the
Court granted summary adjudication as well as the actual fraud claims to be
presented for resolution at trial. Even
if this issue had not been addressed in the context of Plaintiff’s summary adjudication
motion, it could have been raised to bar such relitigation as a motion in
limine, just as Plaintiff does now.
Thus, no evidence may be presented to contradict the prior ruling about
the revocability of the trust. If
requested, the Court would instruct the jury that this issue has already been
decided.
Further,
there is no dispute that the transfers were gifts and that Defendants paid no
money in connection with the transfer of the properties. Based on Defendants’ admissions and the
absence of any contrary evidence, the Court found the Trust received no value
for transfer of the Trust properties.
This issue has, thus, been established such that no contrary evidence or
argument will be permitted at trial. Further,
the Court will instruct the jury, if requested, that there has already been a
finding that the Trust received nothing in exchange for the transfers.
The
remaining findings on summary adjudication do not match up as well with the
remaining elements of actual fraud and, thus, do not establish specific facts
as proven. Thus, for example, the
constructive fraud claim requires proof that “the debtor was insolvent at the
time or the debtor became insolvent as a result of the transfer or obligation.”
(Civ. Code § 3439.05(a).) Insolvency is
based on a statutory definition provided in Civil Code § 3439.02. In contrast, in the absence of proof of an
“actual intent to hinder, delay, or defraud any creditor of the debtor” under §
3439.04(a), an actual fraud claim is grounded on evidence under § 3439.04(a)(2)
that “the debtor: (A) Was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor were unreasonably
small in relation to the business or transaction; or (B) Intended to incur, or believed or
reasonably should have believed that he or she would incur, debts beyond his or
her ability to pay as they became due.”
While some of the same evidence used in support of Plaintiff’s motion
for summary adjudication may also be probative of these financial elements, the
Court disagrees that the summary adjudication finding of insolvency disposes of
any actual fraud element. What is more,
because of the statutory definition of insolvency that is applicable to
constructive fraud but not actual fraud, the Court concludes that any limiting
evidentiary order or jury instruction may be confusing to the jury or give rise
to the need for extraneous explanation of the significance of the Court’s prior
finding for the claims to be tried. Accordingly,
the Court concludes that the summary adjudication ruling does not bar admission
of any evidence regarding the actual fraud elements under § 3439.04(a)(2)(A) or
(B).
Turning
to Plaintiff’s arguments about banning evidence regarding the factors listed
under § 3439.04(b), the Court agrees that evidence and arguments regarding factors
(1), (2), (8) and (9) should be prohibited because they were already resolved
by the Court against Defendants, but denies such relief with regard to any
other factors.
PLAINTIFF’S MIL #2 – to exclude all evidence not disclosed in
discovery.
RULING:
DENIED. Plaintiffs have not identified any specific
evidence that should be excluded nor demonstrated a right to an exclusion
order.
In general, a party who has responded to formal written discovery has no
affirmative duty to supplement its responses when new information comes into
its possession. (Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1318–1319, 1328.) “[A]bsent unusual circumstances, such as
repeated and egregious discovery abuses,” courts will not impose an evidentiary
sanction for a failure to disclose unless there has been a “willful” failure to
disclose. (Id., at p. 1327.) Here, there has been no showing that any of
Defendant’s discovery responses were willfully false or incomplete. (Id., at p. 1323-1324.) Nor have Plaintiffs pointed to any violation
of a court order directing Defendant to provide further answers to Plaintiffs’
discovery.
Here, Plaintiff has not only failed to identify specific evidence that
they claim should be excluded, but it has made no effort to show that any
non-disclosure by Defendants was willful or that the failure to disclose
violated a court order. On this record,
there is no basis for an exclusion order, but if there are specific objections
made at trial grounded on the proper showing, the Court will consider whether
previously unproduced evidence should be excluded.
PLAINTIFF’S MIL #3 – to exclude all evidence and argument
regarding Fannie Mae’s financial condition and size.
RULING: GRANTED. Evidence of Plaintiff’s financial
condition and size is irrelevant to any claim or defense to be litigated at
trial.
