Preview
1 Gary M. Kaplan (State Bar No. 155530)
gkaplan@fbm.com
2 Farella Braun + Martel LLP ELECTRONICALLY
235 Montgomery Street, 17th Floor
3 San Francisco, California 94104 F I L E D
Superior Court of California,
Telephone: (415) 954-4400 County of San Francisco
4 Facsimile: (415) 954-4480
07/20/2022
Clerk of the Court
5 Attorneys for Plaintiffs BY: RONNIE OTERO
CRYSTAL LEI and BRYANT FU Deputy Clerk
6
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF SAN FRANCISCO
10
11 CRYSTAL LEI and BRYANT FU, Case No. CGC-17-556769
12 Plaintiffs, PLAINTIFFS’ REPLY TO DEFENDANTS’
OPPOSITION TO RENEWED MOTION
13 vs. FOR SUMMARY ADJUDICATION ON
FIRST CAUSE OF ACTION
14 TINA YAN, individually and as personal
representative of the estate of CHEUK TIN Date: July 29, 2022
15 YAN, deceased; THAI MING CHIU; Time: 9:30 am
KAMAN LIU; and DOES 1-20 inclusive, Dept.: 501
16 The Hon. Charles F. Haines
Defendants.
17 [HEARING TO BE CONDUCTED VIA
ZOOM VIDEO CONFERENCE
18 PURSUANT TO COURT DIRECTION]
19 I. INTRODUCTION AND SUMMARY OF ARGUMENT
20 Plaintiffs submit their Reply to Defendants’ Opposition to Plaintiffs’ motion for summary
21 adjudication of their first cause of action (fraudulent transfer claim) (the “Motion”1). As discussed
22 below, Defendants’ arguments in the Opposition lacks merit, including based on the following:
23 Defendants’ argument that the immaterial stylistic format of Plaintiffs’ Separate
24 Statement violates California Rule of Court (“CRC”) 3.1350 is frivolous.
25 Likewise, Defendants’ claim that they have been prejudiced in light of the Court’s
26 order shortening time is specious, as they expressly agreed to the briefing schedule
27
1
28 Capitalized terms not defined herein have the meaning ascribed to them in the Motion.
Farella Braun + Martel LLP
235 Montgomery Street, 17th Floor
REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
San Francisco, California 94104
(415) 954-4400
Case No. CGC-17-556769
1 established by the Court, and have had more than four months to respond to the
2 (relatively succinct) Motion, which was initially served on them in early April.
3 By contrast, Defendants’ Separate Statement patently violates CRC 3.1350(f) by
4 failing to respond to any of the 26 listed facts in Plaintiffs’ Separate Statement.
5 Defendants’ bald assertion that essentially none of the facts listed in Plaintiffs’
6 Separate Statement are material is meritless, as the Motion specifically
7 demonstrates the import of each such fact to the relief sought thereby.
8 Defendants’ contention that the Motion does not establish the amount of damages
9 they owe is baseless. Moreover, Defendants fail to raise factual issues regarding
10 Plaintiffs’ calculation of damages in the Motion, as required by applicable law.
11 Defendants’ argument that the Court cannot take judicial notice of orders unless
12 they are final is refuted by controlling law.
13 Defendants’ assertion that Plaintiffs cannot establish injury because Demas Yan’s
14 fraudulent transfer of the Subject Property was subject to a prior avoidance order is
15 meritless. In addition to being legal unsupported, such argument ignores that title
16 was never returned to Demas Yan and it remains unavailable due to Defendants’
17 participation in transfer of the Property, in violation of this Court’s injunction.
18 Equally baseless is Defendants’ argument that Plaintiffs cannot recover monetary
19 damages based on that prior avoidance order. Rather, controlling law (including
20 governing statutes and cases on which Defendants rely) authorize monetary
21 recovery where, as here, the property is no longer available. Meanwhile, other
22 cases Defendants cite are readily distinguishable, including because the property
23 subject to fraudulent transfer claims remained available for recovery by plaintiffs.
24 Defendants’ arguments under the res judicata doctrine are frivolous, as the Motion
25 instead seeks relief based on collateral estoppel, which they fail to even address.
26 As the Motion establishes, each element of Plaintiffs’ fraudulent transfer claim was
27 conclusively determined against Defendants in the Li v. Chiu and 2014 Actions.
28
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(415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
Case No. CGC-17-556769
1 II. DISCUSSION
2 A. Defendants’ Complaints About The Formatting Of Plaintiffs’ Separate
Statement Are Frivolous; Rather, Defendants’ Separate Statement Is Fatally
3 Defective, By Failing To Dispute Any Material Facts In Plaintiffs’ Statement
4 Defendants assert that Plaintiffs’ Separate Statement should be disregarded because it
5 includes three columns instead of two, by breaking out the supporting evidence for each of the listed
6 material facts. Opposition at 5. This argument is specious. This immaterial stylistic formatting
7 (done for the convenience of the parties and the Court) could not have possibly prejudiced
8 Defendants and is not grounds for the Court to refuse to consider Plaintiffs’ Separate Statement.
9 Likewise, Defendants’ contention that they have been prejudiced in light of the Court’s order
10 shortening time with respect to the Motion is frivolous. Indeed, Defendants expressly agreed to the
11 briefing schedule for the Motion established by the Court’s July 1, 2022 Order. See Supplemental
12 Declaration of Gary M. Kaplan in Support of Plaintiffs’ Ex Parte Application for Order Shortening
13 Time on Motion for Summary Adjudication, ¶ 2 & Ex. A. In fact, Defendants have had more than
14 four months to respond to the (relatively succinct) Motion, which, as noted therein, was initially
15 served on them on April 8, 2022. See id. at 2 n. 1.
16 On the other hand, Defendants’ Separate Statement clearly violates CRC 3.1350(f), which
17 provides in relevant part:
18 The Separate Statement in Opposition to Motion must . . . Directly opposite the
recitation of the moving party's statement of material facts and supporting
19 evidence, the response must unequivocally state whether that fact is "disputed" or
"undisputed." An opposing party who contends that a fact is disputed must state, on
20
the right side of the page directly opposite the fact in dispute, the nature of the
21 dispute and describe the evidence that supports the position that the fact is
controverted.
22
Defendants’ Separate Statement fails to respond to any of the 26 listed facts in Plaintiffs’
23
Separate Statement. Instead, Defendants baldly assert that the facts listed in Plaintiffs’ Separate
24
Statement are not material. Opposition at 6. In addition to contravening CRC 3.1350(f), this
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unsupported contention is refuted by the Motion, which specifically demonstrates the import of each
26
of the material facts listed in Plaintiffs’ Separate Statement. See id. pp. 3-8.
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Thus, the Opposition fails to properly oppose any of the material facts set forth in the Motion.
28
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(415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
Case No. CGC-17-556769
1 B. Defendants Wrongly Assert That The Motion Does Not Establish The
Damages They Owe, While Failing To Raise Factual Issues Regarding
2 Plaintiffs’ Calculation Of Damages As Required By Applicable Law
3 Defendants contend that the Motion does not establish the amount of damages they owe,
4 such that relief cannot be granted under CCP Section 437c. Opposition at 7. This argument is
5 meritless, as the Motion expressly sets forth the calculation of damages owed by Defendants, and
6 the specific basis for each element thereof, along with detailed supporting evidence. See id. at 13.
7 Further, the case on which Defendants rely is clearly inapposite. The appellate court in
8 Department of Industrial Relations v. UI Video Stores, Inc. (1997) 55 Cal. App. 4th 1084, after
9 reversing summary judgment that the trial court had awarded to appellee, declined to direct the
10 lower court to award summary judgment in favor of appellant, recognizing that appellant had not
11 sought such relief in the firstinstance below, so that there was no record on which to determine
12 appellant’s alleged damages. Id., 55 Cal. App. 4th at 1097. Obviously, those are not the facts here.
13 Moreover, Defendants fail to raise any factual issues regarding Plaintiffs’ calculation of
14 damages in the Motion, a requirement recognized by the Court of Appeals in the UI Video Stores
15 case on which Defendants rely. See id. (“summary judgment or adjudication improper where
16 amount of damages raises factual issue”) (quoting Weil & Brown, Cal. Practice Guide: Civil
17 Procedure Before Trial (The Rutter Group 1996) ¶ 10:40.1, p. 10-17).
18 C. Defendants’ Objection To Plaintiffs’ Request For Judicial Notice Is Frivolous
19 Defendants argue that the Court cannot take judicial notice of orders in other cases because
20 one of the Court’s rulings has been appealed and is thus not final. Opposition at 8. This argument
21 is refuted by controlling law. Specifically, California Evidence Code Section 452(d) authorizes the
22 Court to take judicial reference of any court records,2 without conditioning doing so on their
23 finality.3 Moreover, the case on which Defendants rely for their novel argument--Sandoval v.
24
25 2
Section 452(d) provides in relevant part: “Judicial notice may be taken of . . . Records of (1) any
26 court of this state or (2) any court of record of the United States or of any state of the United
States.”
27 3
Further, as set forth therein, only one of the exhibits to the RJN raised by Defendants (Ex. M) is
28 not a final judgment.
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(415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
Case No. CGC-17-556769
1 Superior Court (1983) 140 Cal. App. 3d 933—is clearly inapplicable, as it concerned the standard
2 for res judicata, not judicial notice.4
3 Accordingly, Defendants’ objection to Plaintiffs’ RJN should be summarily overruled.
4 D. Defendants’ Contention That Plaintiffs Cannot Establish Injury Because
Demas Yan’s Fraudulent Transfer Of The Subject Property Was Subject To A
5 Prior Avoidance Order Is Meritless
6 Defendants assert:
7 [T]the alleged transfer of the Subject Property to the LLC and the transfers of the
LLC membership interests to defendants were all set aside on June 24, 2016 before
8 the commencement of this action on January 31, 2017. Thus, there is no injury to
plaintiffs because what were alleged to be voidable transfers under the UVTA were
9
already avoided, i.e. set aside, before the commencement of this action.
10
Opposition at 9.
11
Such contentions are both legally and factually unsupported.
12
As a threshold matter, the document on which Defendants rely—this Court’s June 24, 2016
13
Judgment Setting Aside Fraudulent Transfers in the Li v. Chiu Action—did not restore title to the
14
Subject Property in Demas Yan and render it available for enforcement of the debt owed to
15
Plaintiffs. Rather, by its express terms, that Judgment was limited to Li’s recovery on his judgment
16
against Demas Yan. Specifically, that Judgment provides in relevant part:
17
E. . . . The transfer of the Subject Property from defendant Demas Yan to
18 defendant 547 23rd Avenue, LLC, recorded as Document I503243 BK-PG: J538-
270442 in the records of the Office of the Assessor-Recorder, City and County of
19 San Francisco, California, is fraudulent, void, and hereby set aside to the extent
necessary to satisfy plaintiff's judgment against defendant Demas Yan in
20 Charles Li v. Demas Yan, San Francisco Superior Court No. CGC-10-497990,
21 as further amended to include any additional attorneys' fees, costs, and interest
provided by law ("Underlying Judgment");
22
F. The transfer of Demas Yan's membership interests in 547 23rd Avenue,
23 LLC, from defendant Demas Yan to defendants Thai Ming Chiu, Kaman Liu,
and Tina Yan was made with the intent to hinder, delay, or defraud plaintiff; was
24
received without good faith and not in exchange for reasonably equivalent value;
25 and is hereby set aside to the extent necessary to satisfy plaintiff's Underlying
Judgment;
26
27 4
Indeed, the Court of Appeal in that case took judicial notice of a non-final decision in another
28 action. See id., 140 Cal. App. 3d at 944, n. 9.
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(415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
Case No. CGC-17-556769
1 G. Default judgment is hereby entered against defendants 547 23rd Avenue, LLC
and 547 Investments, LLC. The conveyance of the Subject Property from
2 defendant 547 23rd Avenue, LLC to defendant 547 Investments LLC, recorded
as Document J784407 BK-PAG: L025-0559 in the records of the Office of the
3
Assessor-Recorder, City and County of San Francisco, California, is fraudulent,
4 void, and hereby set aside to the extent necessary to satisfy plaintiff's
Underlying Judgment.
5
H. For the purpose of satisfying plaintiff's Underlying Judgment, and for that
6 purpose only, Demas Yan is DECLARED the sole owner of all legal and
equitable title or interest in the Subject Property. Plaintiff may execute or
7
foreclose on the Subject Property to satisfy plaintiff's Underlying Judgment.
8
See Request for Judicial Notice in support of Opposition, Ex. 1 at 2-3 (emphasis added).
9
Further, record title to the Subject Property was not returned to Demas Yan, and remained
10
in 547 Investments LLC pursuant to the November 2013 transfer discussed in the Motion. See
11
accompanying Request for Judicial Notice, Ex. 1. Significantly, Defendants offer no evidence
12
supporting their bare assertion that record title to the Subject Property was held by Demas Yan at
13
the time this action was commenced (January 31, 2017).
14
Moreover, as the Motion establishes, Plaintiffs have been injured because the Subject
15
Property has been rendered unavailable to satisfy the debts owed by Demas Yan to Plaintiffs,
16
including by the conduct of Defendants themselves, despite this Court’s injunction. Specifically,
17
Paragraph K of this Court’s June 24, 2016 Judgment expressly enjoined Defendants from “selling,
18
transferring, disposing, encumbering, concealing, or otherwise transferring the Subject Property
19
without a prior court order.” Defendants’ Request for Judicial Notice Ex. 1 at 4.
20
The Motion (at p. 11) discusses the subsequent sham foreclosure of the Subject Property
21
based on a purported 2007 promissory note that Demas Yan later disavowed having ever made, as
22
the Court of Appeal recognized in its May 2018 Decision. See RJN Ex. E at 7 (“Yan recorded a
23
deed of trust against the property for $1.5 million in favor his wife, even though he admitted at trial
24
that there was no debt owed to his wife”); Ex. L at 149-151 (Yan’s sworn testimony disavowing this
25
deed of trust, and admitting its invalidity as there was no consideration to support it).
26
As the Motion further discussed (at 8), this Court’s November 2018 Judgment (RJN Ex. F)
27
in the Li v. Chiu Action (which is now final), based on the direction in the May 2018 Court of Appeal
28
Farella Braun + Martel LLP
235 Montgomery Street, 17th Floor 6
San Francisco, California 94104
(415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
Case No. CGC-17-556769
1 Decision, found that the Subject Transfer to Defendants was “made with the intent to hinder, delay,
2 or defraud plaintiff; was received without good faith and not in exchange for reasonably equivalent
3 value,” and accordingly ruled that Defendants were liable for fraudulent transfer with respect to the
4 Subject Transfer. Id. at 4-5. Thus, Defendants’ own conduct rendered the Subject Property
5 unavailable, as this Court has previously determined.5
6 Thus, relief is available to Plaintiffs in this action under the very case upon which Defendants
7 rely for the contrary proposition. See Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 80 (“It
8 cannot be said that a creditor has been injured unless the transfer puts beyond [her] reach property
9 [she] otherwise would be able to subject to the payment of [her] debt.” (as cited in Opposition at 10)
10 (citations and internal quotes omitted).6
11 E. Defendants’ Assertion That Plaintiffs Are Precluded From Recovering
Monetary Damages Because Demas Yan’s Fraudulent Transfer Of The
12 Subject Property Was Subject To A Prior Avoidance Order Is Baseless
13 Defendants argue:
14 [T]he UVTA is remedial legislation and the primary remedy is avoidance of
transfer. A plaintiff is not entitled to anything more if reconveyance is available as
15 a remedy to return the parties to the status quo.
16
[A] creditor may only obtain a money judgment against a transferee when the
17 remedy of avoidance of transfer is inadequate to place the judgment creditor in the
same or similar position he held with respect to the fraudulent transferor prior to
18 the fraudulent conveyance.
19 Opposition at 11, 17.
20
21
22
5
Thus, Defendants’ contention that “Plaintiffs allege that the Subject Property was foreclosed and
23 sold on November 1, 2018, but allege no facts or produced no evidence that defendants are in any
way responsible for said foreclosure.” (Opposition at 10, n.2) is frivolous.
24 6
The same is true for Defendants’ reliance on Hy-Lo Unit & Metal Products Co. v. Ryon (1937)
25 21 Cal.App.2d 38 and Flowers & Sons Development Corp. v. Municipal Court (1978) 86
Cal.App.3d 818, both of which held that before entering a money judgment against a transferee in
26 a fraudulent transfer actions under common law, the court must make a preliminary finding of
conspiracy or unavailability of the transferred property. As discussed above, Plaintiffs have
27
established that the Subject Property is unavailable (as well as demonstrating the conspiracy
28 among Demas Yan and Defendants to defraud creditors, including Plaintiffs).
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(415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
Case No. CGC-17-556769
1 Such contentions are refuted by controlling law. As discussed in the Motion (at 11-12),
2 California Civil Code Section 3439.08(b)(1) expressly authorizes the Court to award monetary
3 relief, without limiting such remedy to cases where avoidance of the property transfer is determined
4 to be inadequate. Indeed, as this Court determined in the 2014 Action:
5 A money judgment against the Transferee Defendants is permitted under the
UVTA. [citing Cal. Civ. Code § 3439.08(b)(1)] . . . A money judgment against the
6 transferee may be had when [the transferee] knowingly participates in the
fraudulent conveyance with the intention of defrauding creditors. [citations and
7
internal quotes omitted] . . . The Defendants have manipulated various assets,
8 particularly the Subject Property to avoid satisfying Yan's substantial debts.
9 See RJN Ex. M at 8-9.
10 As discussed in the Motion (at p. 12), this principle is further supported by the reported case
11 law. See, e.g., Flowers & Sons Dev. Corp. v. Mun. Court (1978) 86 Cal. App. 3d 818, 825 (granting
12 monetary relief to plaintiff); Filip v. Bucurenciu, 129 Cal. App. 4th (2005) 825, 839-840 (allowing
13 both avoidance of fraudulent transfers and money judgments as relief); Renda v. Nevarez (2014)
14 223 Cal. App. 4th 1231, 1234-35 (affirming judgment for $450,000 against defendants-transferees,
15 pursuant to Section 3439.08(b)(1)).
16 Meanwhile, the cases cited by Defendants are readily distinguishable. For example,
17 Defendants reliance on Kelleher v. Kelleher, No. 13-cv-05450-MEJ, 2015 U.S. Dist. LEXIS 131723
18 (N.D. Cal. Sep. 29, 2015) is misplaced, including because the transferee there reversed the transfer
19 almost two years before plaintiff filed their complaint. Id. at *1-2 (“there is no dispute that
20 Defendant subsequently reconveyed the proceeds of the [subject property] back to Daniel in
21 December 2011, nearly two years before Plaintiff filed this case.”). In this case, by contrast, the
22 Subject Property is not available to satisfy the debt owed to Plaintiffs, because, as the Court of
23 Appeals determined in its March 29, 2021 Decision in the 2014 Action, future creditors (such as
24 Plaintiffs) were harmed in their ability to collect debts owed by Demas Yan as a result of the subject
25 fraudulent transfers involving Defendants. See RJN Ex. G at 14-15 (discussed in Motion at 10).
26 Similarly, unhelpful is Defendants’ reliance on Renda v. Nevarez (2014) 223 Cal.App.4th
27 1231 for the proposition that a defrauded creditor is entitled to the same position that it had in the
28 absence of the voidable transfer, but is not entitled to an enhanced position. In fact, that is precisely
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(415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
Case No. CGC-17-556769
1 the relief that Plaintiffs seek here—an award of damages to compensate them in view of the
2 unavailability of the Subject Property (as a result of fraudulent transfers for which Defendants are
3 responsible). Indeed, as noted above, the court in Renda affirmed the award of money damages
4 against the transferees under Civil Code Section 3439.08(b)(1). Id., 223 Cal.App.4th at 1234-35.7
5 In view of the foregoing, Defendants’ contention that Plaintiffs cannot recover monetary
6 damages on their fraudulent transfer claim against Defendants is meritless.
7 F. Defendants’ Res Judicata Arguments Are Specious, As The Motion Is Instead
Based On Principles Of Collateral Estoppel, Which Defendants Inexplicably
8 Fail To Even Address In Their Opposition
9 Defendants strenuously argue that the Motion should be denied based on Plaintiffs’
10 purported failure to establish application of the res judicata doctrine. See Opposition at 11.
11 However, the Motion is expressly based on principles of collateral estoppel, not res judicata. See
12 id. at 4-10. Defendants’ Opposition inexplicably does not even mention—let alone refute—the
13 application of the collateral estoppel doctrine to Plaintiffs’ fraudulent transfer claim.
14 Further, Defendants’ contention that the Li v. Chiu Action involved different issues because
15 the defendants in that case had been in possession of the Subject Property is frivolous. As discussed in
16 the Motion (at 6-8), that case involved identical issues, which established (as affirmed by the Court
17 of Appeal) that Demas Yan aka Dennis Yan and the Defendants effectuated the transfer of the
18 Subject Property to defraud Yan’s creditors.
19 Indeed, the Court of Appeal applied the collateral estoppel doctrine in its March 29, 2021
20 Decision to preclude co-Defendants Tina Yan and Cheuk Tin Yan from relitigating their defense in
21 the related 2014 Action involving those same issues, finding:
22
7
Defendants also cite Forum Ins. Co. v. Devere Ltd., 151 F.Supp.2d 1145, 1148 (C.D. Cal. 2001)
23
for the proposition that “the UFTA allows only equitable remedies such as avoidance, attachment,
24 an injunction, or appointment of a receiver. Upon finding an UFTA violation, the court may
cancel the transfer or impose a lien against the transferred property, but it may not award
25 damages.” Opposition at 18-19. In addition to that case being non-binding authority, it is
distinguishable, because it involved a common law conspiracy claim, rather than damages for
26 violation of the UFTA (now UVTA). See id. (“Plaintiff counters that it is not limited by the
remedies set forth in Cal. Civ. Code § 3439.07(a), because it is not asserting a statutory fraudulent
27
conveyance claim but a common law conspiracy claim for which damages are available.”)
28 Further, that case is inapposite because the court there did not even consider Section 3439.08.
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(415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER
Case No. CGC-17-556769
1 There is no dispute that the codefendants were parties to the Li [v. Chiu] [A]ction,
that there was a judgment on the merits, and that the Li [v. Chiu] [A]ction afforded
2 the codefendants a fair and full opportunity to defend against plaintiffs’ UVTA
claim with regard to the 23rd Avenue property.”
3
4 See RJN Ex. G at 13.
5 The Motion clearly establishes that each of the elements of Plaintiffs’ fraudulent transfer
6 claim in this case was conclusively determined against Defendants in the earlier litigation.
7 III. CONCLUSION
8 Based on the foregoing, and for the reasons set forth in the Motion, the Court should reject
9 the Opposition and enter its Order granting the Motion and the relief sought therein.
10
Dated: July 20, 2022 FARELLA BRAUN + MARTEL LLP
11
12 By:
Gary M. Kaplan
13
Attorneys for PLAINTIFFS
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Case No. CGC-17-556769
Preview
1 Gary M. Kaplan (State Bar No. 155530) gkaplan@fbm.com 2 Farella Braun + Martel LLP ELECTRONICALLY 235 Montgomery Street, 17th Floor 3 San Francisco, California 94104 F I L E D Superior Court of California, Telephone: (415) 954-4400 County of San Francisco 4 Facsimile: (415) 954-4480 07/20/2022 Clerk of the Court 5 Attorneys for Plaintiffs BY: RONNIE OTERO CRYSTAL LEI and BRYANT FU Deputy Clerk 6 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SAN FRANCISCO 10 11 CRYSTAL LEI and BRYANT FU, Case No. CGC-17-556769 12 Plaintiffs, PLAINTIFFS’ REPLY TO DEFENDANTS’ OPPOSITION TO RENEWED MOTION 13 vs. FOR SUMMARY ADJUDICATION ON FIRST CAUSE OF ACTION 14 TINA YAN, individually and as personal representative of the estate of CHEUK TIN Date: July 29, 2022 15 YAN, deceased; THAI MING CHIU; Time: 9:30 am KAMAN LIU; and DOES 1-20 inclusive, Dept.: 501 16 The Hon. Charles F. Haines Defendants. 17 [HEARING TO BE CONDUCTED VIA ZOOM VIDEO CONFERENCE 18 PURSUANT TO COURT DIRECTION] 19 I. INTRODUCTION AND SUMMARY OF ARGUMENT 20 Plaintiffs submit their Reply to Defendants’ Opposition to Plaintiffs’ motion for summary 21 adjudication of their first cause of action (fraudulent transfer claim) (the “Motion”1). As discussed 22 below, Defendants’ arguments in the Opposition lacks merit, including based on the following: 23 Defendants’ argument that the immaterial stylistic format of Plaintiffs’ Separate 24 Statement violates California Rule of Court (“CRC”) 3.1350 is frivolous. 25 Likewise, Defendants’ claim that they have been prejudiced in light of the Court’s 26 order shortening time is specious, as they expressly agreed to the briefing schedule 27 1 28 Capitalized terms not defined herein have the meaning ascribed to them in the Motion. Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER San Francisco, California 94104 (415) 954-4400 Case No. CGC-17-556769 1 established by the Court, and have had more than four months to respond to the 2 (relatively succinct) Motion, which was initially served on them in early April. 3 By contrast, Defendants’ Separate Statement patently violates CRC 3.1350(f) by 4 failing to respond to any of the 26 listed facts in Plaintiffs’ Separate Statement. 5 Defendants’ bald assertion that essentially none of the facts listed in Plaintiffs’ 6 Separate Statement are material is meritless, as the Motion specifically 7 demonstrates the import of each such fact to the relief sought thereby. 8 Defendants’ contention that the Motion does not establish the amount of damages 9 they owe is baseless. Moreover, Defendants fail to raise factual issues regarding 10 Plaintiffs’ calculation of damages in the Motion, as required by applicable law. 11 Defendants’ argument that the Court cannot take judicial notice of orders unless 12 they are final is refuted by controlling law. 13 Defendants’ assertion that Plaintiffs cannot establish injury because Demas Yan’s 14 fraudulent transfer of the Subject Property was subject to a prior avoidance order is 15 meritless. In addition to being legal unsupported, such argument ignores that title 16 was never returned to Demas Yan and it remains unavailable due to Defendants’ 17 participation in transfer of the Property, in violation of this Court’s injunction. 18 Equally baseless is Defendants’ argument that Plaintiffs cannot recover monetary 19 damages based on that prior avoidance order. Rather, controlling law (including 20 governing statutes and cases on which Defendants rely) authorize monetary 21 recovery where, as here, the property is no longer available. Meanwhile, other 22 cases Defendants cite are readily distinguishable, including because the property 23 subject to fraudulent transfer claims remained available for recovery by plaintiffs. 24 Defendants’ arguments under the res judicata doctrine are frivolous, as the Motion 25 instead seeks relief based on collateral estoppel, which they fail to even address. 26 As the Motion establishes, each element of Plaintiffs’ fraudulent transfer claim was 27 conclusively determined against Defendants in the Li v. Chiu and 2014 Actions. 28 Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 2 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769 1 II. DISCUSSION 2 A. Defendants’ Complaints About The Formatting Of Plaintiffs’ Separate Statement Are Frivolous; Rather, Defendants’ Separate Statement Is Fatally 3 Defective, By Failing To Dispute Any Material Facts In Plaintiffs’ Statement 4 Defendants assert that Plaintiffs’ Separate Statement should be disregarded because it 5 includes three columns instead of two, by breaking out the supporting evidence for each of the listed 6 material facts. Opposition at 5. This argument is specious. This immaterial stylistic formatting 7 (done for the convenience of the parties and the Court) could not have possibly prejudiced 8 Defendants and is not grounds for the Court to refuse to consider Plaintiffs’ Separate Statement. 9 Likewise, Defendants’ contention that they have been prejudiced in light of the Court’s order 10 shortening time with respect to the Motion is frivolous. Indeed, Defendants expressly agreed to the 11 briefing schedule for the Motion established by the Court’s July 1, 2022 Order. See Supplemental 12 Declaration of Gary M. Kaplan in Support of Plaintiffs’ Ex Parte Application for Order Shortening 13 Time on Motion for Summary Adjudication, ¶ 2 & Ex. A. In fact, Defendants have had more than 14 four months to respond to the (relatively succinct) Motion, which, as noted therein, was initially 15 served on them on April 8, 2022. See id. at 2 n. 1. 16 On the other hand, Defendants’ Separate Statement clearly violates CRC 3.1350(f), which 17 provides in relevant part: 18 The Separate Statement in Opposition to Motion must . . . Directly opposite the recitation of the moving party's statement of material facts and supporting 19 evidence, the response must unequivocally state whether that fact is "disputed" or "undisputed." An opposing party who contends that a fact is disputed must state, on 20 the right side of the page directly opposite the fact in dispute, the nature of the 21 dispute and describe the evidence that supports the position that the fact is controverted. 22 Defendants’ Separate Statement fails to respond to any of the 26 listed facts in Plaintiffs’ 23 Separate Statement. Instead, Defendants baldly assert that the facts listed in Plaintiffs’ Separate 24 Statement are not material. Opposition at 6. In addition to contravening CRC 3.1350(f), this 25 unsupported contention is refuted by the Motion, which specifically demonstrates the import of each 26 of the material facts listed in Plaintiffs’ Separate Statement. See id. pp. 3-8. 27 Thus, the Opposition fails to properly oppose any of the material facts set forth in the Motion. 28 Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 3 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769 1 B. Defendants Wrongly Assert That The Motion Does Not Establish The Damages They Owe, While Failing To Raise Factual Issues Regarding 2 Plaintiffs’ Calculation Of Damages As Required By Applicable Law 3 Defendants contend that the Motion does not establish the amount of damages they owe, 4 such that relief cannot be granted under CCP Section 437c. Opposition at 7. This argument is 5 meritless, as the Motion expressly sets forth the calculation of damages owed by Defendants, and 6 the specific basis for each element thereof, along with detailed supporting evidence. See id. at 13. 7 Further, the case on which Defendants rely is clearly inapposite. The appellate court in 8 Department of Industrial Relations v. UI Video Stores, Inc. (1997) 55 Cal. App. 4th 1084, after 9 reversing summary judgment that the trial court had awarded to appellee, declined to direct the 10 lower court to award summary judgment in favor of appellant, recognizing that appellant had not 11 sought such relief in the firstinstance below, so that there was no record on which to determine 12 appellant’s alleged damages. Id., 55 Cal. App. 4th at 1097. Obviously, those are not the facts here. 13 Moreover, Defendants fail to raise any factual issues regarding Plaintiffs’ calculation of 14 damages in the Motion, a requirement recognized by the Court of Appeals in the UI Video Stores 15 case on which Defendants rely. See id. (“summary judgment or adjudication improper where 16 amount of damages raises factual issue”) (quoting Weil & Brown, Cal. Practice Guide: Civil 17 Procedure Before Trial (The Rutter Group 1996) ¶ 10:40.1, p. 10-17). 18 C. Defendants’ Objection To Plaintiffs’ Request For Judicial Notice Is Frivolous 19 Defendants argue that the Court cannot take judicial notice of orders in other cases because 20 one of the Court’s rulings has been appealed and is thus not final. Opposition at 8. This argument 21 is refuted by controlling law. Specifically, California Evidence Code Section 452(d) authorizes the 22 Court to take judicial reference of any court records,2 without conditioning doing so on their 23 finality.3 Moreover, the case on which Defendants rely for their novel argument--Sandoval v. 24 25 2 Section 452(d) provides in relevant part: “Judicial notice may be taken of . . . Records of (1) any 26 court of this state or (2) any court of record of the United States or of any state of the United States.” 27 3 Further, as set forth therein, only one of the exhibits to the RJN raised by Defendants (Ex. M) is 28 not a final judgment. Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 4 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769 1 Superior Court (1983) 140 Cal. App. 3d 933—is clearly inapplicable, as it concerned the standard 2 for res judicata, not judicial notice.4 3 Accordingly, Defendants’ objection to Plaintiffs’ RJN should be summarily overruled. 4 D. Defendants’ Contention That Plaintiffs Cannot Establish Injury Because Demas Yan’s Fraudulent Transfer Of The Subject Property Was Subject To A 5 Prior Avoidance Order Is Meritless 6 Defendants assert: 7 [T]the alleged transfer of the Subject Property to the LLC and the transfers of the LLC membership interests to defendants were all set aside on June 24, 2016 before 8 the commencement of this action on January 31, 2017. Thus, there is no injury to plaintiffs because what were alleged to be voidable transfers under the UVTA were 9 already avoided, i.e. set aside, before the commencement of this action. 10 Opposition at 9. 11 Such contentions are both legally and factually unsupported. 12 As a threshold matter, the document on which Defendants rely—this Court’s June 24, 2016 13 Judgment Setting Aside Fraudulent Transfers in the Li v. Chiu Action—did not restore title to the 14 Subject Property in Demas Yan and render it available for enforcement of the debt owed to 15 Plaintiffs. Rather, by its express terms, that Judgment was limited to Li’s recovery on his judgment 16 against Demas Yan. Specifically, that Judgment provides in relevant part: 17 E. . . . The transfer of the Subject Property from defendant Demas Yan to 18 defendant 547 23rd Avenue, LLC, recorded as Document I503243 BK-PG: J538- 270442 in the records of the Office of the Assessor-Recorder, City and County of 19 San Francisco, California, is fraudulent, void, and hereby set aside to the extent necessary to satisfy plaintiff's judgment against defendant Demas Yan in 20 Charles Li v. Demas Yan, San Francisco Superior Court No. CGC-10-497990, 21 as further amended to include any additional attorneys' fees, costs, and interest provided by law ("Underlying Judgment"); 22 F. The transfer of Demas Yan's membership interests in 547 23rd Avenue, 23 LLC, from defendant Demas Yan to defendants Thai Ming Chiu, Kaman Liu, and Tina Yan was made with the intent to hinder, delay, or defraud plaintiff; was 24 received without good faith and not in exchange for reasonably equivalent value; 25 and is hereby set aside to the extent necessary to satisfy plaintiff's Underlying Judgment; 26 27 4 Indeed, the Court of Appeal in that case took judicial notice of a non-final decision in another 28 action. See id., 140 Cal. App. 3d at 944, n. 9. Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 5 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769 1 G. Default judgment is hereby entered against defendants 547 23rd Avenue, LLC and 547 Investments, LLC. The conveyance of the Subject Property from 2 defendant 547 23rd Avenue, LLC to defendant 547 Investments LLC, recorded as Document J784407 BK-PAG: L025-0559 in the records of the Office of the 3 Assessor-Recorder, City and County of San Francisco, California, is fraudulent, 4 void, and hereby set aside to the extent necessary to satisfy plaintiff's Underlying Judgment. 5 H. For the purpose of satisfying plaintiff's Underlying Judgment, and for that 6 purpose only, Demas Yan is DECLARED the sole owner of all legal and equitable title or interest in the Subject Property. Plaintiff may execute or 7 foreclose on the Subject Property to satisfy plaintiff's Underlying Judgment. 8 See Request for Judicial Notice in support of Opposition, Ex. 1 at 2-3 (emphasis added). 9 Further, record title to the Subject Property was not returned to Demas Yan, and remained 10 in 547 Investments LLC pursuant to the November 2013 transfer discussed in the Motion. See 11 accompanying Request for Judicial Notice, Ex. 1. Significantly, Defendants offer no evidence 12 supporting their bare assertion that record title to the Subject Property was held by Demas Yan at 13 the time this action was commenced (January 31, 2017). 14 Moreover, as the Motion establishes, Plaintiffs have been injured because the Subject 15 Property has been rendered unavailable to satisfy the debts owed by Demas Yan to Plaintiffs, 16 including by the conduct of Defendants themselves, despite this Court’s injunction. Specifically, 17 Paragraph K of this Court’s June 24, 2016 Judgment expressly enjoined Defendants from “selling, 18 transferring, disposing, encumbering, concealing, or otherwise transferring the Subject Property 19 without a prior court order.” Defendants’ Request for Judicial Notice Ex. 1 at 4. 20 The Motion (at p. 11) discusses the subsequent sham foreclosure of the Subject Property 21 based on a purported 2007 promissory note that Demas Yan later disavowed having ever made, as 22 the Court of Appeal recognized in its May 2018 Decision. See RJN Ex. E at 7 (“Yan recorded a 23 deed of trust against the property for $1.5 million in favor his wife, even though he admitted at trial 24 that there was no debt owed to his wife”); Ex. L at 149-151 (Yan’s sworn testimony disavowing this 25 deed of trust, and admitting its invalidity as there was no consideration to support it). 26 As the Motion further discussed (at 8), this Court’s November 2018 Judgment (RJN Ex. F) 27 in the Li v. Chiu Action (which is now final), based on the direction in the May 2018 Court of Appeal 28 Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 6 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769 1 Decision, found that the Subject Transfer to Defendants was “made with the intent to hinder, delay, 2 or defraud plaintiff; was received without good faith and not in exchange for reasonably equivalent 3 value,” and accordingly ruled that Defendants were liable for fraudulent transfer with respect to the 4 Subject Transfer. Id. at 4-5. Thus, Defendants’ own conduct rendered the Subject Property 5 unavailable, as this Court has previously determined.5 6 Thus, relief is available to Plaintiffs in this action under the very case upon which Defendants 7 rely for the contrary proposition. See Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 80 (“It 8 cannot be said that a creditor has been injured unless the transfer puts beyond [her] reach property 9 [she] otherwise would be able to subject to the payment of [her] debt.” (as cited in Opposition at 10) 10 (citations and internal quotes omitted).6 11 E. Defendants’ Assertion That Plaintiffs Are Precluded From Recovering Monetary Damages Because Demas Yan’s Fraudulent Transfer Of The 12 Subject Property Was Subject To A Prior Avoidance Order Is Baseless 13 Defendants argue: 14 [T]he UVTA is remedial legislation and the primary remedy is avoidance of transfer. A plaintiff is not entitled to anything more if reconveyance is available as 15 a remedy to return the parties to the status quo. 16 [A] creditor may only obtain a money judgment against a transferee when the 17 remedy of avoidance of transfer is inadequate to place the judgment creditor in the same or similar position he held with respect to the fraudulent transferor prior to 18 the fraudulent conveyance. 19 Opposition at 11, 17. 20 21 22 5 Thus, Defendants’ contention that “Plaintiffs allege that the Subject Property was foreclosed and 23 sold on November 1, 2018, but allege no facts or produced no evidence that defendants are in any way responsible for said foreclosure.” (Opposition at 10, n.2) is frivolous. 24 6 The same is true for Defendants’ reliance on Hy-Lo Unit & Metal Products Co. v. Ryon (1937) 25 21 Cal.App.2d 38 and Flowers & Sons Development Corp. v. Municipal Court (1978) 86 Cal.App.3d 818, both of which held that before entering a money judgment against a transferee in 26 a fraudulent transfer actions under common law, the court must make a preliminary finding of conspiracy or unavailability of the transferred property. As discussed above, Plaintiffs have 27 established that the Subject Property is unavailable (as well as demonstrating the conspiracy 28 among Demas Yan and Defendants to defraud creditors, including Plaintiffs). Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 7 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769 1 Such contentions are refuted by controlling law. As discussed in the Motion (at 11-12), 2 California Civil Code Section 3439.08(b)(1) expressly authorizes the Court to award monetary 3 relief, without limiting such remedy to cases where avoidance of the property transfer is determined 4 to be inadequate. Indeed, as this Court determined in the 2014 Action: 5 A money judgment against the Transferee Defendants is permitted under the UVTA. [citing Cal. Civ. Code § 3439.08(b)(1)] . . . A money judgment against the 6 transferee may be had when [the transferee] knowingly participates in the fraudulent conveyance with the intention of defrauding creditors. [citations and 7 internal quotes omitted] . . . The Defendants have manipulated various assets, 8 particularly the Subject Property to avoid satisfying Yan's substantial debts. 9 See RJN Ex. M at 8-9. 10 As discussed in the Motion (at p. 12), this principle is further supported by the reported case 11 law. See, e.g., Flowers & Sons Dev. Corp. v. Mun. Court (1978) 86 Cal. App. 3d 818, 825 (granting 12 monetary relief to plaintiff); Filip v. Bucurenciu, 129 Cal. App. 4th (2005) 825, 839-840 (allowing 13 both avoidance of fraudulent transfers and money judgments as relief); Renda v. Nevarez (2014) 14 223 Cal. App. 4th 1231, 1234-35 (affirming judgment for $450,000 against defendants-transferees, 15 pursuant to Section 3439.08(b)(1)). 16 Meanwhile, the cases cited by Defendants are readily distinguishable. For example, 17 Defendants reliance on Kelleher v. Kelleher, No. 13-cv-05450-MEJ, 2015 U.S. Dist. LEXIS 131723 18 (N.D. Cal. Sep. 29, 2015) is misplaced, including because the transferee there reversed the transfer 19 almost two years before plaintiff filed their complaint. Id. at *1-2 (“there is no dispute that 20 Defendant subsequently reconveyed the proceeds of the [subject property] back to Daniel in 21 December 2011, nearly two years before Plaintiff filed this case.”). In this case, by contrast, the 22 Subject Property is not available to satisfy the debt owed to Plaintiffs, because, as the Court of 23 Appeals determined in its March 29, 2021 Decision in the 2014 Action, future creditors (such as 24 Plaintiffs) were harmed in their ability to collect debts owed by Demas Yan as a result of the subject 25 fraudulent transfers involving Defendants. See RJN Ex. G at 14-15 (discussed in Motion at 10). 26 Similarly, unhelpful is Defendants’ reliance on Renda v. Nevarez (2014) 223 Cal.App.4th 27 1231 for the proposition that a defrauded creditor is entitled to the same position that it had in the 28 absence of the voidable transfer, but is not entitled to an enhanced position. In fact, that is precisely Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 8 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769 1 the relief that Plaintiffs seek here—an award of damages to compensate them in view of the 2 unavailability of the Subject Property (as a result of fraudulent transfers for which Defendants are 3 responsible). Indeed, as noted above, the court in Renda affirmed the award of money damages 4 against the transferees under Civil Code Section 3439.08(b)(1). Id., 223 Cal.App.4th at 1234-35.7 5 In view of the foregoing, Defendants’ contention that Plaintiffs cannot recover monetary 6 damages on their fraudulent transfer claim against Defendants is meritless. 7 F. Defendants’ Res Judicata Arguments Are Specious, As The Motion Is Instead Based On Principles Of Collateral Estoppel, Which Defendants Inexplicably 8 Fail To Even Address In Their Opposition 9 Defendants strenuously argue that the Motion should be denied based on Plaintiffs’ 10 purported failure to establish application of the res judicata doctrine. See Opposition at 11. 11 However, the Motion is expressly based on principles of collateral estoppel, not res judicata. See 12 id. at 4-10. Defendants’ Opposition inexplicably does not even mention—let alone refute—the 13 application of the collateral estoppel doctrine to Plaintiffs’ fraudulent transfer claim. 14 Further, Defendants’ contention that the Li v. Chiu Action involved different issues because 15 the defendants in that case had been in possession of the Subject Property is frivolous. As discussed in 16 the Motion (at 6-8), that case involved identical issues, which established (as affirmed by the Court 17 of Appeal) that Demas Yan aka Dennis Yan and the Defendants effectuated the transfer of the 18 Subject Property to defraud Yan’s creditors. 19 Indeed, the Court of Appeal applied the collateral estoppel doctrine in its March 29, 2021 20 Decision to preclude co-Defendants Tina Yan and Cheuk Tin Yan from relitigating their defense in 21 the related 2014 Action involving those same issues, finding: 22 7 Defendants also cite Forum Ins. Co. v. Devere Ltd., 151 F.Supp.2d 1145, 1148 (C.D. Cal. 2001) 23 for the proposition that “the UFTA allows only equitable remedies such as avoidance, attachment, 24 an injunction, or appointment of a receiver. Upon finding an UFTA violation, the court may cancel the transfer or impose a lien against the transferred property, but it may not award 25 damages.” Opposition at 18-19. In addition to that case being non-binding authority, it is distinguishable, because it involved a common law conspiracy claim, rather than damages for 26 violation of the UFTA (now UVTA). See id. (“Plaintiff counters that it is not limited by the remedies set forth in Cal. Civ. Code § 3439.07(a), because it is not asserting a statutory fraudulent 27 conveyance claim but a common law conspiracy claim for which damages are available.”) 28 Further, that case is inapposite because the court there did not even consider Section 3439.08. Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 9 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769 1 There is no dispute that the codefendants were parties to the Li [v. Chiu] [A]ction, that there was a judgment on the merits, and that the Li [v. Chiu] [A]ction afforded 2 the codefendants a fair and full opportunity to defend against plaintiffs’ UVTA claim with regard to the 23rd Avenue property.” 3 4 See RJN Ex. G at 13. 5 The Motion clearly establishes that each of the elements of Plaintiffs’ fraudulent transfer 6 claim in this case was conclusively determined against Defendants in the earlier litigation. 7 III. CONCLUSION 8 Based on the foregoing, and for the reasons set forth in the Motion, the Court should reject 9 the Opposition and enter its Order granting the Motion and the relief sought therein. 10 Dated: July 20, 2022 FARELLA BRAUN + MARTEL LLP 11 12 By: Gary M. Kaplan 13 Attorneys for PLAINTIFFS 14 41312\14931262.2 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Farella Braun + Martel LLP 235 Montgomery Street, 17th Floor 10 San Francisco, California 94104 (415) 954-4400 REPLY RE RENEWED MOTION FOR SUMMARY ADJUDICATION RE FRAUDULENT TRANSFER Case No. CGC-17-556769