Judge: Virginia Keeny, Case: 21STCV24070, Date: 2025-03-19 Tentative Ruling



Case Number: 21STCV24070    Hearing Date: March 19, 2025    Dept: 45

Hoi Ying Eugene Lai v. Irene Chan

 

motion: Demurrer & Motion to Strike

 

Date of Hearing:         March 19, 2025                       Trial Date: October 13, 2025 

Department:                45                                            Case No.: 21STCV24070      

 

Moving Party:             Defendant Irene Chan

                                   

Responding Party:      Plaintiff Hoi Ying Eugene Lai

 

 

BACKGROUND

 

Factual and Procedural Background –

           

On June 29, 2021, Hoi Ying Eugene Lai (“Plaintiff”) filed a Complaint against Irene Chan (“Defendant”), alleging two causes of action. On May 30, 2024, Plaintiff filed a First Amended Complaint (“FAC”) adding several more causes of action. On June 7, 2023, Defendant filed a Cross-Complaint against Plaintiff and added Cross-Defendant Global West Real Estate Corporation (“Global”). On November 20, 2023, “Global” filed a Cross-Complaint against both Plaintiff and Defendant. Finally, on August 26, 2024, Plaintiff filed the operative Second Amended Complaint (“SAC”) which contains the following nine causes of action:

 

1.      Quiet Title;

2.      Specific Performance;

3.      Breach of Contract;

4.      Breach of Quasi-Contract/Unjust Enrichment;

5.      Promissory Estoppel;

6.      Intentional Misrepresentation;

7.      Negligent Misrepresentation;

8.      Fraudulent Transfer; and

9.      Injunctive and Declaratory Relief.

 

The SAC stems from a real estate transaction. On September 3, 2019, Plaintiff, Defendant and Defendant’s son Albert Choi (“Choi”) agreed to purchase real property located at 9426 Olive Street, Temple City California (the “Subject Property”). As Plaintiff lacked sufficient credit to obtain financing for the Subject Property, Plaintiff, Defendant, and Choi agreed to work together to obtain the Subject Property. (SAC, ¶8.) After acquiring the Subject Property, Plaintiff, Defendant, and Choi executed but did not record a quitclaim deed. (SAC, ¶12.) After Plaintiff paid off the mortgage loan for the Subject Property within the agreed upon three-year time frame, Mr. Choi performed his promise pursuant to the agreement and executed a recordable grant deed transferring his 50% title ownership to Plaintiff on March 4, 2021. However, Defendant transferred her 50% into a living trust and recorded the transfer via quitclaim deed on December 28, 2023. Plaintiff then filed suit.

 

The motion now before the Court is Defendant’s Demurrer to the SAC and Motion to Strike (the Motions). Defendant specifically demurs to the eighth and ninth causes of action. Plaintiff opposes the Motions; Defendant files a reply.  

 

Meet and Confer

 

“Before filing a demurrer…the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc. §430.41(a); see also Code Civ. Proc. §435.5 (imposing similar requirements for a motion to strike).) Defendant submits the form CIV-140 which indicates that the parties did not meet in person nor by telephone[1] as required by Code Civ. Proc. §430.41(a). Therefore, the requirements of Code Civ. Proc. §430.41(a) remain unsatisfied. However, per Code Civ. Proc. §430.41(a)(4), “A determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.” (See also Code Civ. Proc. §435.5(a)(4) imposing a similar rule for a motion to strike.)  

 

Tentative Ruling

           

Defendant Irene Chan’s Demurrer to Plaintiff Hoi Ying Eugene Lai’s Second Amended Complaint is SUSTAINED. The Motion to Strike is DENIED as moot.

 

DISCUSSION

 

Legal Standard for Demurrer

 

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.)

 

Analysis for Demurrer

 

            Eighth Cause of Action: Fraudulent Transfer

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.” (Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13, 33 Cal.Rptr.2d 283.) The Uniform Fraudulent Transfer Act (UFTA, now replaced by the Uniform Voidable Transactions Act or the UVTA) makes fraudulent transfers voidable: “(a) A transfer made or obligation incurred by a debtor is voidable 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: (1) With actual intent to hinder, delay, or defraud any creditor of the debtor. (2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either: (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. (B) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ability to pay as they became due.” (Nautilus, Inc. v. Yang (2017), 11 Cal.App.5th 33, 39, citing CCP § 3439.04, subd. (a).)

 

Defendant contends Plaintiff fails to state sufficient facts to sustain a cause of action for fraudulent transfer. Specifically, Defendant contends that Defendant transferring their interest in the Subject Property to a revocable living trust does not constitute fraudulent transfer. In making this contention, Defendant relies on Gagan v. Gouyd (1999) 73 Cal.App.4th 835 (Gagan), arguing that the court there ruled that a transfer of property to a revocable trust cannot constitute a fraudulent transfer. This is a misreading of Gagan. Gagan specifically held that the UFTA did not apply to marital settlement agreements. (Gagan, supra, 842-843.) Upon opposition, Plaintiff notes that the Supreme Court in Mejia v. Reed (2003) 31 Cal.4th 657 (Mejia) explicitly disapproved of Gagan stating that the UFTA does apply to marital settlement agreements. What Gagan did state is that the transfer did not dispose of or constitute a parting because the property transferred in Gagan was still available to creditors. (Gagan, supra, at 842.) The Court in Gagan cited specifically to the definition of the word “transfer” under Civ. Code §3439.04 which provides: “‘Transfer’ means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, lease, license, and creation of a lien or other encumbrance.” (Civ. Code §3439.01(m).) The Court in Gagan therefore ruled that a transfer had not occurred.

 

Defendant puts forth the same argument here. Plaintiff counters, arguing that although the trust is revocable and Defendant is liable to her creditors during her lifetime, the revocability of her trust and the liability to her creditors has an expiration date, which may arise before the end of litigation. However, “Upon the death of a settlor, the property of the deceased settlor that was subject to the power of revocation at the time of the settlor's death is subject to the claims of creditors of the deceased settlor's probate estate and to the expenses of administration of the probate estate to the extent that the deceased settlor's probate estate is inadequate to satisfy those claims and expenses.” (Cal. Prob. Code §19001(a).) Unless the Subject Property is removed from the revocable trust, or the revocability of the trust comes into question, there has been no disposal nor parting of Defendant’s interest in the Subject Property, therefore, there has been no transfer. The Subject Property is still within reach of Plaintiff’s lis pendens specifically, and within reach of Plaintiff as a creditor generally. Accordingly, the demurrer to the cause of action for fraudulent conveyance is sustained.   

 

Ninth Cause of Action: Injunctive and Declaratory Relief

 

The Court notes, “injunctive relief is a remedy and not, in itself, a cause of action, and a cause of action must exist before injunctive relief can be granted.” (Camp v. Board of Supervisors (1981) 123 Cal.App.3d 334, 356.) Therefore, the demurrer to the ninth cause of action is sustained without leave to amend.           

 

Motion to Strike

           

As the demurrer has been sustained with regard to the eighth cause of action for fraudulent conveyance and the ninth cause of action as to injunctive and declaratory relief, the Motion to Strike is denied as moot because the provisions requesting to be struck relate to the causes of action demurred to.

 

Leave to Amend

 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”]. The court will hear argument as to whether any amendment is possible. 

 

CONCLUSION

           

Accordingly, Defendant Irene Chan’s Demurrer to Plaintiff Hoi Ying Eugene Lai’s Second Amended Complaint is SUSTAINED. The Motion to Strike is DENIED as moot.