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1 McCRACKEN, STEMERMAN & HOLSBERRY, LLP
JOHN J. DAVIS, JR., SBN 65594 jjdavis@msh.law
2 ELECTRONICALLY
595 Market Street, Suite 800
3 San Francisco, CA 94105 F I L E D
Superior Court of California,
Tel.: (415) 597-7200; Fax: (415) 597-7201 County of San Francisco
4
06/23/2020
LAW OFFICE OF MICHAEL C. MILLER Clerk of the Court
5 BY: RONNIE OTERO
MICHAEL C. MILLER, SBN 51155 collect1@earthlink.net Deputy Clerk
6 530 Oak Grove Avenue, Suite 106
Menlo Park, CA 94025
7 Tel.: (650) 323-2003; Fax: (650) 323-2005
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Attorneys for Plaintiffs TRICO Pipes and Aram Hodess
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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COUNTY OF SAN FRANCISCO
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TRICO PIPES, ARAM HODESS, Trustee, ) Case No.: CGC-15-546021
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15 Plaintiff, )
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16 v. ) PLAINTIFFS’ TRIAL BRIEF
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MS. WONG aka MS. WONG K. WONG; )
18 and DOES 1 TO 30, )
) ORIGINAL COMPLAINT FILED: May 27, 2015
19 )
Defendants. )
20 ) TRIAL DATE: June 22, 2020
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 TABLE OF CONTENTS
Page
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I. Synopsis ........................................................................................................................................ 1
4
II. The Essential Facts Are Undisputed. ............................................................................................ 2
5
A. The factual elements of Mr. Wong’s fraudulent transfers are undisputed. .............................. 2
6
7 B. The factual elements of Plaintiffs’ Creditors Suit are Undisputed. ......................................... 3
8 III. Factual History.............................................................................................................................. 4
9 A. Background .............................................................................................................................. 4
10
B. Mr. Wong’s “Loans” of his Plumbing License to Contractors. ............................................... 4
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C. The Wong Assets ..................................................................................................................... 8
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D. The Wong Family..................................................................................................................... 9
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14 IV. Legal Analysis ............................................................................................................................ 11
15 A. The Uniform Voidable Transactions Act. .............................................................................. 11
16 1. Mr. Wong’s Fraudulent Transfers Were Intentional. ....................................................... 11
17
2. Even if Mr. Wong Made The Transfers Without Intending To Hinder
18 Collection, The Transfers Were Voidable Transfers Under The UVTA. ........................ 12
19 3. The Transfers Rendered Mr. Wong Insolvent. ................................................................. 13
20 4. TRICO Pipes Is Entitled To A Money Judgment. ............................................................ 14
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B. TRICO Pipes Has A Valid Creditor’s Suit. ........................................................................... 15
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C. Ms. Wong’s Affirmative Defenses Already Have Been Decided Against Her. .................... 15
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D. TRICO Pipes Is Entitled To Damages Of $2,019,728.83. ..................................................... 16
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 I. Synopsis
2 Plaintiffs sue Defendant Winnie Wong because she is the transferee of fraudulent
3 conveyances, a house and bank accounts, from her former husband, Wayne Wong. Plaintiffs have
4 a judgment against Mr. Wong that is now worth $2,592,712. Mr. Wong is not now a defendant in
5 this action because he filed bankruptcy after making the transfers. Mr. Wong knew that he would
6 likely be sued for Big Bears’ debts before he made the transfers to Ms. Wong. He received
7 nothing in return, and the transfers left him insolvent. The pre-existence of Mr. Wong’s business
8 liabilities and his insolvency after the transfers, whether he knew of the liabilities or not, renders
9 the transferee liable for the value of the transfers. Plaintiffs seek a money judgment against
10 Ms. Wong for the value of the assets transferred.
11 Mr. Wong was a co-principal in Big Bears Construction, a plumbing contractor that
12 violated the prevailing wage laws while contracting on public-works projects. Big Bears paid its
13 Chinese-immigrant employees far below the required prevailing wages. When the workers
14 learned that they had been cheated, they came to TRICO Pipes for help.
15 TRICO Pipes sued as the employees’ wage-claim assignee and obtained a judgment against
16 Mr. Wong and others on April 30, 2014 in the amount of $1,634,275.85.
17 In the late summer or early fall of 2010, Mr. Wong became aware that the Big Bears
18 employees and TRICO Pipes had claims against him. After learning of TRICO’s claims against
19 him, Mr. Wong conveyed his entire interest in the family home at 2447 27th Avenue, San
20 Francisco, to his then wife, Ms. Wong, by Quitclaim Deed executed on November 26, 2010. He
21 thereafter transferred his interest in Bank of America savings accounts, Nos. 4035 and 3638, to
22 Ms. Wong. Just prior to Plaintiffs’ levy in April 2015, the 3638 account held $134,308.80 and the
23 4035 account held $9,071.52. In addition, Mr. Wong’s salary that was deposited into the 4035
24 account for 2012, 2013 and 2014 totaled $176,348.51, while Ms. Wong’s salary deposits for the
25 same period were only $6,033.29. The transfers in 2012-2014 were made after Mr. Wong was
26 served as a defendant with the summons and complaint in the underlying action, TRICO Pipes v.
27 Big Bears Construction General Partnership, San Francisco Superior Court Case No. CGC-11-
28 509765. These transfers left Mr. Wong with essentially no assets.
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 The house and bank accounts were community property. The fair market value of the house
2 is now $1.7 million. There is no mortgage. The monetary value of the fraudulently transferred
3 assets totals $2,019,728.83.
4 TRICO Pipes levied on the Wongs’ bank accounts in April 2015. In response to the levy,
5 Ms. Wong filed a third-party claim contending that the assets were her separate property.
6 Plaintiffs then filed this action as a Creditor’s Suit under Code of Civil Procedure section
7 708.210 in May 2015.
8 The summons and complaint in this action were served on Ms. Wong on November 21,
9 2015. Pursuant to Code of Civil Procedure 708.250, a lien was thus created on the transferred
10 assets. Mr. Wong then filed for Bankruptcy protection on December 16, 2015.
11 In April 2019, Plaintiffs’ amended their complaint to include the second through sixth
12 cause of action for fraudulent transfer under Civil Code section 3439.01, et seq., to recover from
13 Ms. Wong the value of the fraudulently transferred assets.
14 II. The Essential Facts Are Undisputed.
15 A. The factual elements of Mr. Wong’s fraudulent transfers are undisputed.
16 To recover for a fraudulent transfer under section 3439.05, a creditor need only show that:
17 1. The plaintiff has a right to payment from a debtor. (CACI 4203, ¶ 1.)
18 Here, Plaintiffs have a judgment against Wayne Wong in the amount of
19 $1,634,275.85; with interest, the judgment’s current value is $2,592,712.
20 2. The debtor transferred assets to the Defendant. (CACI 4203, ¶ 2.)
21 Here it is undisputed that the debtor, Mr. Wong, transferred assets to Defendant
22 Winnie Wong.
23 3. The debtor did not receive a reasonably equivalent value in exchange for the transfers.
24 (CACI 4203, ¶ 3.)
25 It is undisputed that Defendant gave Mr. Wong nothing in exchange for the
26 transferred assets.
27 4. The creditor’s right to payment from the debtor arose before the debtor transferred the
28 property. (CACI 4203, ¶ 4.)
2
PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 The testimony of Thomas Lawson will show that the wage underpayments awarded
2 in TRICO Pipes v. Big Bears General Partnership were for work done from late
3 August 2010 through mid-November 2010. Judge Dorfman found in that case that
4 Mr. Wong’s and his co-principal’s treatment of the Big Bears entities was such that
5 the Big Bears entities were “mere alter egos” of Mr. Wong and his co-principal, such
6 that the wage-underpayment debt of the Big Bears entities was the debt of Mr. Wong
7 and his co-principal.
8 5. The debtor became insolvent as a result of the transfer(s). (CACI 4203, ¶ 5.)
9 Mr. Wong’s testimony and bankruptcy schedules show that after the transfers to
10 Ms. Wong, the value of his remaining assets was far less than the amount of TRICO
11 Pipes’ judgment.
12 6. Plaintiff was harmed. (CACI 4203, ¶ 6.)
13 The transfers deprived TRICO Pipes of the ability to satisfy its judgment for the
14 wages of its assignors, the Big Bears employees, and its own attorneys’ fees and
15 costs.
16 7. The debtor’s conduct was a substantial factor in causing the Plaintiffs’ harm. (CACI
17 4203, ¶ 7.)
18 By making the transfers in issue, for no value in exchange, Mr. Wong rendered
19 himself incapable of paying the wage claims and thus deprived the Big Bears
20 employees and TRICO Pipes of their ability to recover most, if not all of the wages,
21 liquidated damages, interest, attorneys’ fees and costs awarded in the judgment.
22 Once Plaintiffs have proved all of the above, they do not have to prove that Mr. Wong
23 intended to defraud any creditors. (Civ. Code § 3439.05, subd. (a); Mejia v. Reed (2003) 31
24 Cal.4th 657, 664, 670; CACI 4203.)
25 B. The factual elements of Plaintiffs’ Creditors Suit are Undisputed.
26 The facts required to prevail in a Creditor’s Suit under Code of Civil Procedure section
27 708.210 are even simpler. A judgment creditor need only prove that a third person has possession
28 or control of property in which the judgment debtor has an interest. (Id.)
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 Here, it is undisputed that Ms. Wong received property – the real property at 2447 27th
2 Avenue, the bank accounts and Mr. Wong’s salary – in which Mr. Wong has either a separate-
3 property or a community-property interest. Plaintiffs are entitled to have Mr. Wong’s interest in
4 that property applied to satisfaction of their money judgment. (Id.)
5 III. Factual History
6 A. Background
7 Mr. Wong and Ms. Wong were married in Hong Kong in 1978. They came to the U.S.
8 shortly thereafter. Mr. Wong worked for several construction companies and obtained a plumbing
9 contractor’s license in California on August 1, 1982. He operated Wing’s Plumbing, a small
10 company with an occasional employee. He became a plumbing inspector for the City of San
11 Francisco in 1998, where he is still employed. Ms. Wong worked as a bookkeeper and became a
12 payroll clerk at the San Francisco Airport in 2000. She still holds that job. They have two
13 children, Cynthia, born August 3, 1987 and Brian, born January 11, 1989.
14 Mr. Wong and Ms. Wong purchased the home at 2447 27th Avenue, San Francisco, by deed
15 recorded May 19, 1988. The price was $275,000. They purchased the house with savings from
16 their earnings. Neither received any substantial gifts from others or inheritances. The house was
17 free and clear by 2006.
18 Mr. Wong and Ms. Wong obtained a credit line secured by a deed of trust on the property
19 in 2005 for a maximum of $200,000. They intended to convert part of the garage into a master
20 bedroom and bath downstairs, and did so in 2007. They increased the credit line to $300,000 in
21 2006. In 2007, they hired Shing Yan Yip, a contractor who lived up the block at 2479 27th
22 Avenue, to perform the work. The credit line was used to pay for the remodel. The credit line
23 was also used for some other purposes. The Wongs paid off the credit line from their joint
24 account, Bank of America Account No 4035.
25 B. Mr. Wong’s “Loans” of his Plumbing License to Contractors.
26 As a full time plumbing inspector employed by the City and County of San Francisco,
27 Mr. Wong was prohibited from also working as a plumbing contractor. Nonetheless, he loaned”
28 his contractor’s license to at least six different construction companies. The individuals who
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 operated those companies used his license to perform plumbing work rather than qualifying for a
2 license in their own name.
3 Construction contractors are governed by Business and Professions Code sections 7000, et
4 seq. and regulated by the Contractors State License Board (CSLB). A company can only obtain a
5 contractor’s license if a person holding a license qualifies as the owner or manager of the company.
6 If a partnership, the qualifying person becomes the “Qualifying Partner.” If a corporation, the
7 qualifying person becomes either the “Responsible Managing Officer” (RMO) or “Responsible
8 Managing Employee” (RME).
9 Mr. Wong was required to pass examinations for his contractor’s licenses. The
10 examinations included the law governing contractors, including licensing for individuals,
11 partnerships and corporations. He took and passed three different examinations for his licenses.
12 He held licenses as a “B” general contractor, C36 Plumbing Contractor, C 16 Fire Protection
13 Contractor and C 20 Heating and Air Conditioning Contractor.
14 For any company to use Mr. Wong’s licenses, Mr. Wong had to state under penalty of
15 perjury that he would manage the company and that he had an ownership interest in it. Although
16 Mr. Wong signed applications for at least six different entities to obtain contractors’ licenses
17 between 2006 and 2012, he stated repeatedly in deposition that he performed no work with any of
18 these companies, owned no part of any, knew nothing of their operations and merely “loaned” his
19 license to “help them out.” When confronted with the legal requirements, Mr. Wong testified that
20 he “forgot” the rules. As a plumbing inspector, the City prohibited him from working as a
21 contractor.
22 Three of the companies he “helped out” were Big Bears Construction, a partnership, Big
23 Bears Construction, Inc. and Duke’s Corporation. Mr. Wong’s license application for Big Bears
24 Construction, a partnership, claimed he was the “qualifying partner.” The license was issued on
25 June 21, 2006. Mr. Wong submitted another application for Big Bears Construction, Inc. on
26 November 17, 2008 and became the RME. As the RME, Wong stated under penalty of perjury that
27 he would spend at least 32 hours per week managing the company. In deposition, Wong claimed
28 he knew nothing of the Big Bears operations, supervised none of the companies’ work and received
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 no payment for generously loaning his license.
2 Big Bears Construction, Inc. submitted bids for public work as a plumbing subcontractor.
3 Public work requires payment of “prevailing wages” to the employees. These wages rates are
4 published by the Director of Industrial Relations and are based on union scale. (Lab. Code §
5 1773.)
6 Big Bears hired Chinese-speaking recent immigrants as plumbers and paid them between
7 $10 and $20 per hour rather than the required $70+ per hour. This allowed Big Bears to underbid
8 the competition and reap substantial profits. By the second half of 2010, Big Bears had ongoing
9 plumbing subcontracts for at least ten different public-works projects including schools, police
10 stations and libraries throughout the Bay Area.
11 TRICO Pipes is a joint labor management committee formed pursuant to federal labor law,
12 29 U.S.C. § 175a, in Contra Costa County. Among other duties, TRICO Pipes monitors public
13 works projects to enforce prevailing wage and apprenticeship rules. (See Lab. Code §§ 1771.2
14 and 1776.) Aram Hodess was TRICO’s chair throughout the underlying lawsuit; Tom Lawson is
15 now the chair. One of Big Bears’ projects was in Contra Costa County in the summer of 2010.
16 Big Bears had no apprentices and was required to hire one in late August 2010. That is how Big
17 Bears came to TRICO Pipes’ attention.
18 On August 27, 2010, the South Bay Piping Industry Labor Management Trust, another
19 labor-management committee, sent a letter to Big Bears warning it to follow the apprenticeship
20 and prevailing wage rules. The letter stated that Big Bears’ certified payrolls would be examined
21 to determine if the proper wages had been paid.
22 Big Bears had hired the union apprentice a few days before the South Bay letter was sent.
23 The apprentice’s pay was much greater than Big Bears’ journeyman employees, as the latter soon
24 learned. A group of the Big Bears workers contacted TRICO Pipes’ compliance officer, Tom
25 Lawson, in August 2010. Mr. Lawson worked with the Big Bears employees to identify the
26 projects they worked on and document their wages and hours. He then calculated the unpaid
27 wages they were owed, along with liquidated damages and interest pursuant to the prevailing wage
28 law. (See Lab. Code § 1771.2.)
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 After Mr. Wong’s co-principal in Big Bears, Jack Wang, received the letter from South
2 Bay Piping, he informed Mr. Wong that Big Bears would likely be sued. Mr. Wong, fearing that
3 he would be responsible for Big Bears’ illegal underpayment of wages, sent a “Disassociation
4 Request” form to the CSLB to formally remove his name and license qualifier status from Big
5 Bears Partnership as of November 8, 2010.
6 Realizing that disassociation would not protect him against liability for Big Bears’ illegal
7 acts while he was the RME and Qualifying Partner, Mr. Wong executed the Quitclaim Deed
8 conveying his interest in the house to Ms. Wong on November 26, 2010. Both he and Ms. Wong
9 acknowledge that Mr. Wong received nothing for this conveyance. As a result, Mr. Wong
10 rendered himself insolvent.
11 Mr. Wong then realized that he had also qualified for the Big Bears Construction, Inc.
12 license, so he sent a second Disassociation Request on December 10, 2010. Mr. Wong admitted in
13 depositions in his bankruptcy case and in this case that he disassociated because he feared being
14 sued.
15 Mr. Wong also testified that Jack Wang, his Big Bears co-principal, approached him with a
16 plan to resolve the lawsuit by forming a new company to make money and pay off the claims.
17 Mr. Wong agreed and became the RMO of Duke’s Corporation in March 2011. However, Duke’s
18 was unable to contract because TRICO had alerted general contractors and public entities about
19 Big Bears’ prevailing-wage practices.
20 The Big Bears entities had worked on multiple public work projects and greatly underpaid
21 their workers. On December 8, 2010, TRICO Pipes served stop notices on ten of the projects’
22 awarding bodies, prime contractors and Big Bears. In early 2011 TRICO Pipes sued public
23 entities, prime contractors and bonding companies in addition to the Big Bears entities, Mr. Wong,
24 Mr. Wang and others in San Francisco Superior Court, Case No. CGC 11-509765, to recover the
25 unpaid wages, plus liquidated damages, interest, attorneys’ fees and costs. Mr. Wong filed an
26 answer in that case.
27 TRICO reached settlements with the public entities, bonding companies and contractors.
28 That allowed the workers to receive some of the pay they should have received from Big Bears.
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 Mr. Wong did not appear at trial. The ultimate judgment was for the balance due after
2 settlement with the public entities, bonding companies and contractors, plus attorneys’ fees and
3 litigation expenses.
4 C. The Wong Assets
5 The Wongs held the house at 2447 27th Avenue, San Francisco, in joint tenancy until
6 Mr. Wong conveyed it to Ms. Wong on November 26, 2010. The house had a small mortgage that
7 was paid off in 2006. The only encumbrance thereafter was a secured credit line that financed,
8 among other things, a home remodel in 2007, and was paid off by June, 2010.
9 From before 2003 until 2015, prior to Mr. Wong’s bankruptcy filing, Ms. Wong and Mr.
10 Wong maintained joint bank accounts:
11 a. Mr. Wong and Ms. Wong maintained a joint checking account at Bank of America, the
12 last digits of which are 4035.
13 b. Mr. Wong and Ms. Wong maintained joint savings accounts under various numbers at
14 Bank of America. By April 15, 2015, the balance was $134,308.80.
15 c. Mr. Wong had his salary directly deposited into the 4035 checking account at all times
16 from 2003 to 2015, except for two months. Ms. Wong, employed as a payroll clerk at
17 the San Francisco Airport, also had her salary directly deposited into this account for
18 much of this time.
19 d. Mr. Wong’s expenses were paid from the 4035 account after 2003. One example is
20 the payment of his auto insurance. Ms. Wong’s expenses were also paid from the
21 4035 account.
22 e. Mr. Wong and Ms. Wong applied for a line of credit secured by the house in 2005 and
23 increased the credit limit to $300,000 in 2006. The credit line was used to pay for the
24 house remodel as well as for other purposes. All payments made were from the 4035
25 account.
26 Both Mr. Wong’s and Ms. Wong’s names were shown on the registration for a 2009
27 Toyota Scion, which they purchased new. Mr. Wong and Ms. Wong both testified that Mr.
28 Wong exclusively used this car. They were joint owners even as late as 2016.
8
PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 Mr. Wong and Ms. Wong filed joint income tax returns as “married filing jointly” for every
2 year through 2015.
3 D. The Wong Family
4 Mr. and Ms. Wong lived together at 2447 27th Avenue. In June 2003, Mr. Wong filed a
5 Petition for Dissolution of Marriage in San Francisco Superior Court (Case No. FDI -03-754112).
6 But he did not tell Ms. Wong about it. Nothing further was filed and Ms. Wong was not served
7 until 2016, after this case had been filed and after Mr. Wong had filed for bankruptcy protection in
8 December 2015.
9 There were no written agreements between Ms. Wong and Mr. Wong regarding their
10 property or incomes until they executed a “Marital Settlement Agreement” dated April 7, 2016, the
11 year after TRICO Pipes had levied on the bank accounts and Mr. Wong had filed for bankruptcy
12 protection. There was no prior written agreement. And the bank accounts were held jointly as
13 shown above until after TRICO Pipes’ levy in April 2015.
14 Oral agreements between spouses to divide property do not protect those assets from
15 creditors. Litke O’Farrell, LLC v. Tipton (2012) 204 Cal.App.4th 1178, 1182, held that “property
16 received by a nondebtor spouse escapes liability for the debtor spouse's debt only ‘after division’ of
17 the community property.” (Fam. Code § 916, subd. (a)(2).) Division requires a valid written
18 marital settlement agreement, made before entry of judgment dividing marital property. (Id.)
19 A written agreement is required. An oral agreement cannot divide the property.
20 Mr. and Ms. Wong’s Marital Settlement Agreement merely confirmed the earlier fraudulent
21 transfers by allocating the bank accounts, the house and Ms. Wong’s retirement funds to Ms. Wong.
22 Mr. Wong received nothing other than his retirement funds in the City and County of San Francisco
23 Retirement System. Ms. Wong also received her CCSF retirement fund as her property. Mr. Wong
24 had become insolvent as the result of the transfers, which the MSA merely confirmed.
25 Mr. Wong and Ms. Wong now claim that they separated in 2003 and never reconciled.
26 That is a claim of convenience, considering TRICO Pipes’ judgment and this action. There is
27 substantial evidence to contradict their claim. As stated above, they maintained joint bank
28 accounts into which they deposited their earnings, had both names on auto registrations, and filed
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 tax returns as “married filing jointly.”
2 Mr. Wong’s testimony about the separation is not credible. He testified that his only income
3 was from his plumbing inspector salary, all of which was directly deposited into the 4035 account
4 until TRICO Pipes levied on it in April 2015. He testified that Ms. Wong controlled all the money
5 and would give him only what she decided he should have. Not only was this financially
6 impossible if Mr. Wong had been living away from the 27th Avenue home, but it is beyond reason
7 that a marriage partner who leaves the other would allow the other to control all of the income of
8 both of them. All of the financial records indicate that Mr. and Ms. Wong were operating as
9 husband and wife.
10 TRICO Pipes levied on the bank accounts on April 20, 2015. Immediately thereafter,
11 Mr. Wong’s name was removed from the accounts. Ms. Wong then filed a Verified Third Party
12 Claim in which she claimed the accounts belonged to her alone. TRICO elected not to challenge
13 her claim and instead filed this action on May 27, 2015.
14 TRICO Pipes obtained an Earnings Withholding Order against Mr. Wong in late 2015. That
15 prompted him to file for bankruptcy protection. Although he was required to do so, Mr. Wong did
16 not list the bank accounts or his many transfers to Ms. Wong in his bankruptcy filings.
17 Mr. and Ms. Wong bought the 27th Avenue house in 1988. The house was purchased and
18 improved with community earnings. Both testified that they did not receive any substantial
19 amounts by gift or inheritance and that neither had substantial assets when they came to the U.S.
20 Family Code section 910 provides that the community estate is liable for the debt of either
21 spouse incurred before or during marriage. If the trier of fact finds that Mr. Wong and Ms. Wong
22 separated after the Big Bears wage liability accrued, the evidence will show that the house is
23 community property and its entire value can be applied to satisfy TRICO’s judgment. Mr. Wong’s
24 wage-claim liability accrued from late August through mid-November 2010, the time period
25 covered by the judgment in TRICO Pipes v. Big Bears General Partnership.
26 If the trier of fact finds that Mr. and Ms. Wong actually separated before the Big Bears wage
27 obligation arose, such a finding would necessarily have to state that they separated before August
28 2010. Should that be the finding, Mr. Wong still has an interest in the house equal to Ms. Wong’s.
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 TRICO Pipes is entitled to recover the value of that interest from Ms. Wong. The salaries of each
2 of them were separate property after separation. Since Mr. Wong’s separate property salary was
3 approximately twice that of Ms. Wong’s and was directly deposited into the 4035 account, and
4 since all payments to reduce the credit line balance came from the 4035 account, Mr. Wong’s
5 salary made those payments totaling about $77,000 by July 30, 2010. Mr. Wong is entitled to
6 reimbursement of this amount from Ms. Wong’s interest in the house.
7 IV. Legal Analysis
8 A. The Uniform Voidable Transactions Act.
9 Civil Code sections 3439, et seq. cover fraudulent transfers and the rights of creditors when
10 such transfers occur.
11 1. Mr. Wong’s Fraudulent Transfers Were Intentional.
12 Section 3439.04, subdivision (a) states in part:
13 (a) A transfer made or obligation incurred by a debtor is voidable as to a creditor,
14 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
15
obligation as follows:
16
17 (1) With actual intent to hinder, delay or defraud any creditor of the debtor.
18 Criteria to be considered when deciding whether a transfer was intentionally fraudulent are
19 listed in Civil Code Section 3439.04, subdivision (a)(1) and subdivision (b). The most important
20 criteria here are:
21 (1) Whether the transfer or obligation was to an insider. (Civ. Code § 3439.04, subd.
22 (b)(1).)
23
24 Here, Transferee Ms. Wong was Transferor Mr. Wong’s wife. (See CACI 4201
(a), including relatives as “insiders”.)
25
26 (2) Whether the debtor retained possession or control of the property transferred after
27 the transfer. (Civ. Code § 3439.04, subd. (b)(2).)
28
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PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
The evidence will show that Mr. Wong had access to the house throughout and
1
financed the remodel.
2
3 (3) Whether before the transfer was made, the debtor had been sued or was
threatened with suit. (Civ. Code § 3439.04, subd. (b)(4).)
4
5
Mr. Wong admitted repeatedly in deposition that he disassociated from Big Bears
6 on November 8, 2010 because he had been told that Big Bears was in trouble and
7 he could be sued.
8
(4) Whether the transfer was of substantially all of the debtor’s assets. (Civ. Code §
9 3439.04, subd. (b)(5).)
10
Mr. Wong had nothing but his salary after the transfers. Future earnings cannot
11
be included as an asset when determining insolvency. (Civ. Code § 3439.02.)
12
(8) Whether the value of the consideration received by the debtor was reasonably
13
equivalent to the value of the asset transferred. (Civ. Code § 3439.04, subd.
14
(b)(8).)
15
16 Both Mr. Wong and Ms. Wong admit that Mr. Wong received nothing for either
the house or the bank accounts.
17
18 (9) Whether the debtor was insolvent or became insolvent shortly before or after a
19 substantial debt was incurred. (Civ. Code § 3439.04, subd. (b)(9).)
20 Mr. Wong signed the Quitclaim Deed transferring 2447 27th Avenue to Ms.
21 Wong on November 26, 2010. The Big Bears prevailing wage liability was
22 incurred from late August through mid-November 2010.
23 2. Even if Mr. Wong Made The Transfers Without Intending To Hinder
24 Collection, The Transfers Were Voidable Transfers Under The UVTA.
25 Civil Code section 3439.05, subdivision (a) provides an alternate basis for establishing a
26 voidable transfer. It protects creditors who, like TRICO Pipes have claims existing at the time of
27 the transfer. It provides:
28
12
PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
A transfer made or obligation incurred by a debtor is voidable as to a creditor
1
whose claim arose before the transfer was made or the obligation was incurred
2
if the debtor made the transfer without receiving a reasonably equivalent value
3 in exchange for the transfer or obligation and the debtor was insolvent as a
4 result of the transfer or obligation.
5 Under section 3439.05, the creditor need not prove that the debtor knew of the creditor’s claim.
6 The creditor need only prove that 1) its claim arose before the transfer; 2) the debtor made the
7 transfer without receiving reasonably equivalent value; and 3) as a result of the transfer, the debtor
8 became insolvent.
9 The essential facts are that Mr. Wong transferred the house to Ms. Wong by deed dated
10 November 26, 2010, eighteen days after he notified the CSLB that he was disassociating from Big
11 Bears. He testified that he disassociated because he feared he would be sued due to Big Bears’
12 illegal activities and his illegal participation. Ms. Wong is certainly an insider. He testified that he
13 knew there were claims against Big Bears, and he thought that he could be sued because he was
14 “responsible.” (Exhibit 11) Both he and Ms. Wong testified that he received nothing in return.
15 Although there is substantial evidence that Mr. Wong’s intent in making the transfers was to
16 delay, hinder and defraud TRICO Pipes, proof of his intent is not essential for Plaintiffs to recover
17 from Ms. Wong. Even without fraudulent intent, Plaintiffs can recover under Civil Code section
18 3439.05, if the transfers were not in exchange for reasonably equivalent value, and if the transfers
19 rendered Mr. Wong insolvent, then the transferee is liable in damages for the value of the transfers.
20 (Civ. Code § 3439.05; Mejia v. Reed (2003) 31 Cal.4th 657, 664, 670.)
21 3. The Transfers Rendered Mr. Wong Insolvent.
22 Civil Code section 3439.02, subdivision (a) states:
23 A debtor is insolvent if, as a fair valuation, the sum of the debtor’s debts is
24 greater than the sum of the debtor’s assets.
25 Civil Code section 3439.02, subdivision (c) states that for the purpose of determining a
26 debtor’s insolvency under the section, assets do not include those that have been transferred.
27 Mr. Wong was insolvent. While he may not have known the amount of his Big Bears-
28 related debt, he knew it was substantial because he transferred the house shortly after learning of
13
PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021
1 his exposure. This transfer means that the value of the house cannot be included in Mr. Wong’s
2 assets for this analysis. Mr. Wong’s interest in the savings account is not sufficient to overcome
3 his insolvency. Furthermore, since he fraudulently transferred the account to Ms. Wong, this
4 amount cannot be considered as Mr. Wong’s asset for the purposes of calculating solvency. Mr.
5 Wong’s future salary, as yet unearned, cannot be considered an asset. (Mejia, 31 Cal.4th at 671.)
6 Not only did Mr. Wong give the house to Ms. Wong, but he continued to have his salary
7 directly deposited into the joint account until April 2105. Both Mr. Ms. Wong testified that Ms.
8 Wong had control of the bank accounts even though Mr. Wong’s name was listed as an owner.
9 Mr. Wong claims now that he knew nothing of the Big Bears activities. However, he
10 testified that in 2010 he walked from his house on 27th Avenue to the Parkside Library, one of the
11 Big Bears public works jobs. He met Jack Wang, his co-principal in Big Bears there.
12 Mr. Wong claimed in deposition that he did not know how much “prevailing wages” were.
13 Prevailing wages are determined and published by the Director of Industrial Relations, and reflect
14 union scale. Mr. Wong has been a member of Plumbers and Pipefitters Local Union No. 38 since
15 he became a plumbing inspector in 1998, 12 years before the Big Bears wage liability accrued. His
16 salary is based on Plumbers Union scale wages. Since he knew Big Bears was contracting on
17 public work requiring prevailing wages, and since he knew the prevailing-wage scale was $70 to
18 $88 per hour (depending on the county), he knew
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1 McCRACKEN, STEMERMAN & HOLSBERRY, LLP JOHN J. DAVIS, JR., SBN 65594 jjdavis@msh.law 2 ELECTRONICALLY 595 Market Street, Suite 800 3 San Francisco, CA 94105 F I L E D Superior Court of California, Tel.: (415) 597-7200; Fax: (415) 597-7201 County of San Francisco 4 06/23/2020 LAW OFFICE OF MICHAEL C. MILLER Clerk of the Court 5 BY: RONNIE OTERO MICHAEL C. MILLER, SBN 51155 collect1@earthlink.net Deputy Clerk 6 530 Oak Grove Avenue, Suite 106 Menlo Park, CA 94025 7 Tel.: (650) 323-2003; Fax: (650) 323-2005 8 Attorneys for Plaintiffs TRICO Pipes and Aram Hodess 9 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 COUNTY OF SAN FRANCISCO 12 13 TRICO PIPES, ARAM HODESS, Trustee, ) Case No.: CGC-15-546021 14 ) ) 15 Plaintiff, ) ) 16 v. ) PLAINTIFFS’ TRIAL BRIEF ) 17 ) MS. WONG aka MS. WONG K. WONG; ) 18 and DOES 1 TO 30, ) ) ORIGINAL COMPLAINT FILED: May 27, 2015 19 ) Defendants. ) 20 ) TRIAL DATE: June 22, 2020 / 21 22 23 24 25 26 27 28 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 TABLE OF CONTENTS Page 2 3 I. Synopsis ........................................................................................................................................ 1 4 II. The Essential Facts Are Undisputed. ............................................................................................ 2 5 A. The factual elements of Mr. Wong’s fraudulent transfers are undisputed. .............................. 2 6 7 B. The factual elements of Plaintiffs’ Creditors Suit are Undisputed. ......................................... 3 8 III. Factual History.............................................................................................................................. 4 9 A. Background .............................................................................................................................. 4 10 B. Mr. Wong’s “Loans” of his Plumbing License to Contractors. ............................................... 4 11 C. The Wong Assets ..................................................................................................................... 8 12 D. The Wong Family..................................................................................................................... 9 13 14 IV. Legal Analysis ............................................................................................................................ 11 15 A. The Uniform Voidable Transactions Act. .............................................................................. 11 16 1. Mr. Wong’s Fraudulent Transfers Were Intentional. ....................................................... 11 17 2. Even if Mr. Wong Made The Transfers Without Intending To Hinder 18 Collection, The Transfers Were Voidable Transfers Under The UVTA. ........................ 12 19 3. The Transfers Rendered Mr. Wong Insolvent. ................................................................. 13 20 4. TRICO Pipes Is Entitled To A Money Judgment. ............................................................ 14 21 B. TRICO Pipes Has A Valid Creditor’s Suit. ........................................................................... 15 22 C. Ms. Wong’s Affirmative Defenses Already Have Been Decided Against Her. .................... 15 23 D. TRICO Pipes Is Entitled To Damages Of $2,019,728.83. ..................................................... 16 24 25 26 27 28 i PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 I. Synopsis 2 Plaintiffs sue Defendant Winnie Wong because she is the transferee of fraudulent 3 conveyances, a house and bank accounts, from her former husband, Wayne Wong. Plaintiffs have 4 a judgment against Mr. Wong that is now worth $2,592,712. Mr. Wong is not now a defendant in 5 this action because he filed bankruptcy after making the transfers. Mr. Wong knew that he would 6 likely be sued for Big Bears’ debts before he made the transfers to Ms. Wong. He received 7 nothing in return, and the transfers left him insolvent. The pre-existence of Mr. Wong’s business 8 liabilities and his insolvency after the transfers, whether he knew of the liabilities or not, renders 9 the transferee liable for the value of the transfers. Plaintiffs seek a money judgment against 10 Ms. Wong for the value of the assets transferred. 11 Mr. Wong was a co-principal in Big Bears Construction, a plumbing contractor that 12 violated the prevailing wage laws while contracting on public-works projects. Big Bears paid its 13 Chinese-immigrant employees far below the required prevailing wages. When the workers 14 learned that they had been cheated, they came to TRICO Pipes for help. 15 TRICO Pipes sued as the employees’ wage-claim assignee and obtained a judgment against 16 Mr. Wong and others on April 30, 2014 in the amount of $1,634,275.85. 17 In the late summer or early fall of 2010, Mr. Wong became aware that the Big Bears 18 employees and TRICO Pipes had claims against him. After learning of TRICO’s claims against 19 him, Mr. Wong conveyed his entire interest in the family home at 2447 27th Avenue, San 20 Francisco, to his then wife, Ms. Wong, by Quitclaim Deed executed on November 26, 2010. He 21 thereafter transferred his interest in Bank of America savings accounts, Nos. 4035 and 3638, to 22 Ms. Wong. Just prior to Plaintiffs’ levy in April 2015, the 3638 account held $134,308.80 and the 23 4035 account held $9,071.52. In addition, Mr. Wong’s salary that was deposited into the 4035 24 account for 2012, 2013 and 2014 totaled $176,348.51, while Ms. Wong’s salary deposits for the 25 same period were only $6,033.29. The transfers in 2012-2014 were made after Mr. Wong was 26 served as a defendant with the summons and complaint in the underlying action, TRICO Pipes v. 27 Big Bears Construction General Partnership, San Francisco Superior Court Case No. CGC-11- 28 509765. These transfers left Mr. Wong with essentially no assets. 1 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 The house and bank accounts were community property. The fair market value of the house 2 is now $1.7 million. There is no mortgage. The monetary value of the fraudulently transferred 3 assets totals $2,019,728.83. 4 TRICO Pipes levied on the Wongs’ bank accounts in April 2015. In response to the levy, 5 Ms. Wong filed a third-party claim contending that the assets were her separate property. 6 Plaintiffs then filed this action as a Creditor’s Suit under Code of Civil Procedure section 7 708.210 in May 2015. 8 The summons and complaint in this action were served on Ms. Wong on November 21, 9 2015. Pursuant to Code of Civil Procedure 708.250, a lien was thus created on the transferred 10 assets. Mr. Wong then filed for Bankruptcy protection on December 16, 2015. 11 In April 2019, Plaintiffs’ amended their complaint to include the second through sixth 12 cause of action for fraudulent transfer under Civil Code section 3439.01, et seq., to recover from 13 Ms. Wong the value of the fraudulently transferred assets. 14 II. The Essential Facts Are Undisputed. 15 A. The factual elements of Mr. Wong’s fraudulent transfers are undisputed. 16 To recover for a fraudulent transfer under section 3439.05, a creditor need only show that: 17 1. The plaintiff has a right to payment from a debtor. (CACI 4203, ¶ 1.) 18 Here, Plaintiffs have a judgment against Wayne Wong in the amount of 19 $1,634,275.85; with interest, the judgment’s current value is $2,592,712. 20 2. The debtor transferred assets to the Defendant. (CACI 4203, ¶ 2.) 21 Here it is undisputed that the debtor, Mr. Wong, transferred assets to Defendant 22 Winnie Wong. 23 3. The debtor did not receive a reasonably equivalent value in exchange for the transfers. 24 (CACI 4203, ¶ 3.) 25 It is undisputed that Defendant gave Mr. Wong nothing in exchange for the 26 transferred assets. 27 4. The creditor’s right to payment from the debtor arose before the debtor transferred the 28 property. (CACI 4203, ¶ 4.) 2 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 The testimony of Thomas Lawson will show that the wage underpayments awarded 2 in TRICO Pipes v. Big Bears General Partnership were for work done from late 3 August 2010 through mid-November 2010. Judge Dorfman found in that case that 4 Mr. Wong’s and his co-principal’s treatment of the Big Bears entities was such that 5 the Big Bears entities were “mere alter egos” of Mr. Wong and his co-principal, such 6 that the wage-underpayment debt of the Big Bears entities was the debt of Mr. Wong 7 and his co-principal. 8 5. The debtor became insolvent as a result of the transfer(s). (CACI 4203, ¶ 5.) 9 Mr. Wong’s testimony and bankruptcy schedules show that after the transfers to 10 Ms. Wong, the value of his remaining assets was far less than the amount of TRICO 11 Pipes’ judgment. 12 6. Plaintiff was harmed. (CACI 4203, ¶ 6.) 13 The transfers deprived TRICO Pipes of the ability to satisfy its judgment for the 14 wages of its assignors, the Big Bears employees, and its own attorneys’ fees and 15 costs. 16 7. The debtor’s conduct was a substantial factor in causing the Plaintiffs’ harm. (CACI 17 4203, ¶ 7.) 18 By making the transfers in issue, for no value in exchange, Mr. Wong rendered 19 himself incapable of paying the wage claims and thus deprived the Big Bears 20 employees and TRICO Pipes of their ability to recover most, if not all of the wages, 21 liquidated damages, interest, attorneys’ fees and costs awarded in the judgment. 22 Once Plaintiffs have proved all of the above, they do not have to prove that Mr. Wong 23 intended to defraud any creditors. (Civ. Code § 3439.05, subd. (a); Mejia v. Reed (2003) 31 24 Cal.4th 657, 664, 670; CACI 4203.) 25 B. The factual elements of Plaintiffs’ Creditors Suit are Undisputed. 26 The facts required to prevail in a Creditor’s Suit under Code of Civil Procedure section 27 708.210 are even simpler. A judgment creditor need only prove that a third person has possession 28 or control of property in which the judgment debtor has an interest. (Id.) 3 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 Here, it is undisputed that Ms. Wong received property – the real property at 2447 27th 2 Avenue, the bank accounts and Mr. Wong’s salary – in which Mr. Wong has either a separate- 3 property or a community-property interest. Plaintiffs are entitled to have Mr. Wong’s interest in 4 that property applied to satisfaction of their money judgment. (Id.) 5 III. Factual History 6 A. Background 7 Mr. Wong and Ms. Wong were married in Hong Kong in 1978. They came to the U.S. 8 shortly thereafter. Mr. Wong worked for several construction companies and obtained a plumbing 9 contractor’s license in California on August 1, 1982. He operated Wing’s Plumbing, a small 10 company with an occasional employee. He became a plumbing inspector for the City of San 11 Francisco in 1998, where he is still employed. Ms. Wong worked as a bookkeeper and became a 12 payroll clerk at the San Francisco Airport in 2000. She still holds that job. They have two 13 children, Cynthia, born August 3, 1987 and Brian, born January 11, 1989. 14 Mr. Wong and Ms. Wong purchased the home at 2447 27th Avenue, San Francisco, by deed 15 recorded May 19, 1988. The price was $275,000. They purchased the house with savings from 16 their earnings. Neither received any substantial gifts from others or inheritances. The house was 17 free and clear by 2006. 18 Mr. Wong and Ms. Wong obtained a credit line secured by a deed of trust on the property 19 in 2005 for a maximum of $200,000. They intended to convert part of the garage into a master 20 bedroom and bath downstairs, and did so in 2007. They increased the credit line to $300,000 in 21 2006. In 2007, they hired Shing Yan Yip, a contractor who lived up the block at 2479 27th 22 Avenue, to perform the work. The credit line was used to pay for the remodel. The credit line 23 was also used for some other purposes. The Wongs paid off the credit line from their joint 24 account, Bank of America Account No 4035. 25 B. Mr. Wong’s “Loans” of his Plumbing License to Contractors. 26 As a full time plumbing inspector employed by the City and County of San Francisco, 27 Mr. Wong was prohibited from also working as a plumbing contractor. Nonetheless, he loaned” 28 his contractor’s license to at least six different construction companies. The individuals who 4 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 operated those companies used his license to perform plumbing work rather than qualifying for a 2 license in their own name. 3 Construction contractors are governed by Business and Professions Code sections 7000, et 4 seq. and regulated by the Contractors State License Board (CSLB). A company can only obtain a 5 contractor’s license if a person holding a license qualifies as the owner or manager of the company. 6 If a partnership, the qualifying person becomes the “Qualifying Partner.” If a corporation, the 7 qualifying person becomes either the “Responsible Managing Officer” (RMO) or “Responsible 8 Managing Employee” (RME). 9 Mr. Wong was required to pass examinations for his contractor’s licenses. The 10 examinations included the law governing contractors, including licensing for individuals, 11 partnerships and corporations. He took and passed three different examinations for his licenses. 12 He held licenses as a “B” general contractor, C36 Plumbing Contractor, C 16 Fire Protection 13 Contractor and C 20 Heating and Air Conditioning Contractor. 14 For any company to use Mr. Wong’s licenses, Mr. Wong had to state under penalty of 15 perjury that he would manage the company and that he had an ownership interest in it. Although 16 Mr. Wong signed applications for at least six different entities to obtain contractors’ licenses 17 between 2006 and 2012, he stated repeatedly in deposition that he performed no work with any of 18 these companies, owned no part of any, knew nothing of their operations and merely “loaned” his 19 license to “help them out.” When confronted with the legal requirements, Mr. Wong testified that 20 he “forgot” the rules. As a plumbing inspector, the City prohibited him from working as a 21 contractor. 22 Three of the companies he “helped out” were Big Bears Construction, a partnership, Big 23 Bears Construction, Inc. and Duke’s Corporation. Mr. Wong’s license application for Big Bears 24 Construction, a partnership, claimed he was the “qualifying partner.” The license was issued on 25 June 21, 2006. Mr. Wong submitted another application for Big Bears Construction, Inc. on 26 November 17, 2008 and became the RME. As the RME, Wong stated under penalty of perjury that 27 he would spend at least 32 hours per week managing the company. In deposition, Wong claimed 28 he knew nothing of the Big Bears operations, supervised none of the companies’ work and received 5 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 no payment for generously loaning his license. 2 Big Bears Construction, Inc. submitted bids for public work as a plumbing subcontractor. 3 Public work requires payment of “prevailing wages” to the employees. These wages rates are 4 published by the Director of Industrial Relations and are based on union scale. (Lab. Code § 5 1773.) 6 Big Bears hired Chinese-speaking recent immigrants as plumbers and paid them between 7 $10 and $20 per hour rather than the required $70+ per hour. This allowed Big Bears to underbid 8 the competition and reap substantial profits. By the second half of 2010, Big Bears had ongoing 9 plumbing subcontracts for at least ten different public-works projects including schools, police 10 stations and libraries throughout the Bay Area. 11 TRICO Pipes is a joint labor management committee formed pursuant to federal labor law, 12 29 U.S.C. § 175a, in Contra Costa County. Among other duties, TRICO Pipes monitors public 13 works projects to enforce prevailing wage and apprenticeship rules. (See Lab. Code §§ 1771.2 14 and 1776.) Aram Hodess was TRICO’s chair throughout the underlying lawsuit; Tom Lawson is 15 now the chair. One of Big Bears’ projects was in Contra Costa County in the summer of 2010. 16 Big Bears had no apprentices and was required to hire one in late August 2010. That is how Big 17 Bears came to TRICO Pipes’ attention. 18 On August 27, 2010, the South Bay Piping Industry Labor Management Trust, another 19 labor-management committee, sent a letter to Big Bears warning it to follow the apprenticeship 20 and prevailing wage rules. The letter stated that Big Bears’ certified payrolls would be examined 21 to determine if the proper wages had been paid. 22 Big Bears had hired the union apprentice a few days before the South Bay letter was sent. 23 The apprentice’s pay was much greater than Big Bears’ journeyman employees, as the latter soon 24 learned. A group of the Big Bears workers contacted TRICO Pipes’ compliance officer, Tom 25 Lawson, in August 2010. Mr. Lawson worked with the Big Bears employees to identify the 26 projects they worked on and document their wages and hours. He then calculated the unpaid 27 wages they were owed, along with liquidated damages and interest pursuant to the prevailing wage 28 law. (See Lab. Code § 1771.2.) 6 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 After Mr. Wong’s co-principal in Big Bears, Jack Wang, received the letter from South 2 Bay Piping, he informed Mr. Wong that Big Bears would likely be sued. Mr. Wong, fearing that 3 he would be responsible for Big Bears’ illegal underpayment of wages, sent a “Disassociation 4 Request” form to the CSLB to formally remove his name and license qualifier status from Big 5 Bears Partnership as of November 8, 2010. 6 Realizing that disassociation would not protect him against liability for Big Bears’ illegal 7 acts while he was the RME and Qualifying Partner, Mr. Wong executed the Quitclaim Deed 8 conveying his interest in the house to Ms. Wong on November 26, 2010. Both he and Ms. Wong 9 acknowledge that Mr. Wong received nothing for this conveyance. As a result, Mr. Wong 10 rendered himself insolvent. 11 Mr. Wong then realized that he had also qualified for the Big Bears Construction, Inc. 12 license, so he sent a second Disassociation Request on December 10, 2010. Mr. Wong admitted in 13 depositions in his bankruptcy case and in this case that he disassociated because he feared being 14 sued. 15 Mr. Wong also testified that Jack Wang, his Big Bears co-principal, approached him with a 16 plan to resolve the lawsuit by forming a new company to make money and pay off the claims. 17 Mr. Wong agreed and became the RMO of Duke’s Corporation in March 2011. However, Duke’s 18 was unable to contract because TRICO had alerted general contractors and public entities about 19 Big Bears’ prevailing-wage practices. 20 The Big Bears entities had worked on multiple public work projects and greatly underpaid 21 their workers. On December 8, 2010, TRICO Pipes served stop notices on ten of the projects’ 22 awarding bodies, prime contractors and Big Bears. In early 2011 TRICO Pipes sued public 23 entities, prime contractors and bonding companies in addition to the Big Bears entities, Mr. Wong, 24 Mr. Wang and others in San Francisco Superior Court, Case No. CGC 11-509765, to recover the 25 unpaid wages, plus liquidated damages, interest, attorneys’ fees and costs. Mr. Wong filed an 26 answer in that case. 27 TRICO reached settlements with the public entities, bonding companies and contractors. 28 That allowed the workers to receive some of the pay they should have received from Big Bears. 7 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 Mr. Wong did not appear at trial. The ultimate judgment was for the balance due after 2 settlement with the public entities, bonding companies and contractors, plus attorneys’ fees and 3 litigation expenses. 4 C. The Wong Assets 5 The Wongs held the house at 2447 27th Avenue, San Francisco, in joint tenancy until 6 Mr. Wong conveyed it to Ms. Wong on November 26, 2010. The house had a small mortgage that 7 was paid off in 2006. The only encumbrance thereafter was a secured credit line that financed, 8 among other things, a home remodel in 2007, and was paid off by June, 2010. 9 From before 2003 until 2015, prior to Mr. Wong’s bankruptcy filing, Ms. Wong and Mr. 10 Wong maintained joint bank accounts: 11 a. Mr. Wong and Ms. Wong maintained a joint checking account at Bank of America, the 12 last digits of which are 4035. 13 b. Mr. Wong and Ms. Wong maintained joint savings accounts under various numbers at 14 Bank of America. By April 15, 2015, the balance was $134,308.80. 15 c. Mr. Wong had his salary directly deposited into the 4035 checking account at all times 16 from 2003 to 2015, except for two months. Ms. Wong, employed as a payroll clerk at 17 the San Francisco Airport, also had her salary directly deposited into this account for 18 much of this time. 19 d. Mr. Wong’s expenses were paid from the 4035 account after 2003. One example is 20 the payment of his auto insurance. Ms. Wong’s expenses were also paid from the 21 4035 account. 22 e. Mr. Wong and Ms. Wong applied for a line of credit secured by the house in 2005 and 23 increased the credit limit to $300,000 in 2006. The credit line was used to pay for the 24 house remodel as well as for other purposes. All payments made were from the 4035 25 account. 26 Both Mr. Wong’s and Ms. Wong’s names were shown on the registration for a 2009 27 Toyota Scion, which they purchased new. Mr. Wong and Ms. Wong both testified that Mr. 28 Wong exclusively used this car. They were joint owners even as late as 2016. 8 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 Mr. Wong and Ms. Wong filed joint income tax returns as “married filing jointly” for every 2 year through 2015. 3 D. The Wong Family 4 Mr. and Ms. Wong lived together at 2447 27th Avenue. In June 2003, Mr. Wong filed a 5 Petition for Dissolution of Marriage in San Francisco Superior Court (Case No. FDI -03-754112). 6 But he did not tell Ms. Wong about it. Nothing further was filed and Ms. Wong was not served 7 until 2016, after this case had been filed and after Mr. Wong had filed for bankruptcy protection in 8 December 2015. 9 There were no written agreements between Ms. Wong and Mr. Wong regarding their 10 property or incomes until they executed a “Marital Settlement Agreement” dated April 7, 2016, the 11 year after TRICO Pipes had levied on the bank accounts and Mr. Wong had filed for bankruptcy 12 protection. There was no prior written agreement. And the bank accounts were held jointly as 13 shown above until after TRICO Pipes’ levy in April 2015. 14 Oral agreements between spouses to divide property do not protect those assets from 15 creditors. Litke O’Farrell, LLC v. Tipton (2012) 204 Cal.App.4th 1178, 1182, held that “property 16 received by a nondebtor spouse escapes liability for the debtor spouse's debt only ‘after division’ of 17 the community property.” (Fam. Code § 916, subd. (a)(2).) Division requires a valid written 18 marital settlement agreement, made before entry of judgment dividing marital property. (Id.) 19 A written agreement is required. An oral agreement cannot divide the property. 20 Mr. and Ms. Wong’s Marital Settlement Agreement merely confirmed the earlier fraudulent 21 transfers by allocating the bank accounts, the house and Ms. Wong’s retirement funds to Ms. Wong. 22 Mr. Wong received nothing other than his retirement funds in the City and County of San Francisco 23 Retirement System. Ms. Wong also received her CCSF retirement fund as her property. Mr. Wong 24 had become insolvent as the result of the transfers, which the MSA merely confirmed. 25 Mr. Wong and Ms. Wong now claim that they separated in 2003 and never reconciled. 26 That is a claim of convenience, considering TRICO Pipes’ judgment and this action. There is 27 substantial evidence to contradict their claim. As stated above, they maintained joint bank 28 accounts into which they deposited their earnings, had both names on auto registrations, and filed 9 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 tax returns as “married filing jointly.” 2 Mr. Wong’s testimony about the separation is not credible. He testified that his only income 3 was from his plumbing inspector salary, all of which was directly deposited into the 4035 account 4 until TRICO Pipes levied on it in April 2015. He testified that Ms. Wong controlled all the money 5 and would give him only what she decided he should have. Not only was this financially 6 impossible if Mr. Wong had been living away from the 27th Avenue home, but it is beyond reason 7 that a marriage partner who leaves the other would allow the other to control all of the income of 8 both of them. All of the financial records indicate that Mr. and Ms. Wong were operating as 9 husband and wife. 10 TRICO Pipes levied on the bank accounts on April 20, 2015. Immediately thereafter, 11 Mr. Wong’s name was removed from the accounts. Ms. Wong then filed a Verified Third Party 12 Claim in which she claimed the accounts belonged to her alone. TRICO elected not to challenge 13 her claim and instead filed this action on May 27, 2015. 14 TRICO Pipes obtained an Earnings Withholding Order against Mr. Wong in late 2015. That 15 prompted him to file for bankruptcy protection. Although he was required to do so, Mr. Wong did 16 not list the bank accounts or his many transfers to Ms. Wong in his bankruptcy filings. 17 Mr. and Ms. Wong bought the 27th Avenue house in 1988. The house was purchased and 18 improved with community earnings. Both testified that they did not receive any substantial 19 amounts by gift or inheritance and that neither had substantial assets when they came to the U.S. 20 Family Code section 910 provides that the community estate is liable for the debt of either 21 spouse incurred before or during marriage. If the trier of fact finds that Mr. Wong and Ms. Wong 22 separated after the Big Bears wage liability accrued, the evidence will show that the house is 23 community property and its entire value can be applied to satisfy TRICO’s judgment. Mr. Wong’s 24 wage-claim liability accrued from late August through mid-November 2010, the time period 25 covered by the judgment in TRICO Pipes v. Big Bears General Partnership. 26 If the trier of fact finds that Mr. and Ms. Wong actually separated before the Big Bears wage 27 obligation arose, such a finding would necessarily have to state that they separated before August 28 2010. Should that be the finding, Mr. Wong still has an interest in the house equal to Ms. Wong’s. 10 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 TRICO Pipes is entitled to recover the value of that interest from Ms. Wong. The salaries of each 2 of them were separate property after separation. Since Mr. Wong’s separate property salary was 3 approximately twice that of Ms. Wong’s and was directly deposited into the 4035 account, and 4 since all payments to reduce the credit line balance came from the 4035 account, Mr. Wong’s 5 salary made those payments totaling about $77,000 by July 30, 2010. Mr. Wong is entitled to 6 reimbursement of this amount from Ms. Wong’s interest in the house. 7 IV. Legal Analysis 8 A. The Uniform Voidable Transactions Act. 9 Civil Code sections 3439, et seq. cover fraudulent transfers and the rights of creditors when 10 such transfers occur. 11 1. Mr. Wong’s Fraudulent Transfers Were Intentional. 12 Section 3439.04, subdivision (a) states in part: 13 (a) A transfer made or obligation incurred by a debtor is voidable as to a creditor, 14 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 15 obligation as follows: 16 17 (1) With actual intent to hinder, delay or defraud any creditor of the debtor. 18 Criteria to be considered when deciding whether a transfer was intentionally fraudulent are 19 listed in Civil Code Section 3439.04, subdivision (a)(1) and subdivision (b). The most important 20 criteria here are: 21 (1) Whether the transfer or obligation was to an insider. (Civ. Code § 3439.04, subd. 22 (b)(1).) 23 24 Here, Transferee Ms. Wong was Transferor Mr. Wong’s wife. (See CACI 4201 (a), including relatives as “insiders”.) 25 26 (2) Whether the debtor retained possession or control of the property transferred after 27 the transfer. (Civ. Code § 3439.04, subd. (b)(2).) 28 11 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 The evidence will show that Mr. Wong had access to the house throughout and 1 financed the remodel. 2 3 (3) Whether before the transfer was made, the debtor had been sued or was threatened with suit. (Civ. Code § 3439.04, subd. (b)(4).) 4 5 Mr. Wong admitted repeatedly in deposition that he disassociated from Big Bears 6 on November 8, 2010 because he had been told that Big Bears was in trouble and 7 he could be sued. 8 (4) Whether the transfer was of substantially all of the debtor’s assets. (Civ. Code § 9 3439.04, subd. (b)(5).) 10 Mr. Wong had nothing but his salary after the transfers. Future earnings cannot 11 be included as an asset when determining insolvency. (Civ. Code § 3439.02.) 12 (8) Whether the value of the consideration received by the debtor was reasonably 13 equivalent to the value of the asset transferred. (Civ. Code § 3439.04, subd. 14 (b)(8).) 15 16 Both Mr. Wong and Ms. Wong admit that Mr. Wong received nothing for either the house or the bank accounts. 17 18 (9) Whether the debtor was insolvent or became insolvent shortly before or after a 19 substantial debt was incurred. (Civ. Code § 3439.04, subd. (b)(9).) 20 Mr. Wong signed the Quitclaim Deed transferring 2447 27th Avenue to Ms. 21 Wong on November 26, 2010. The Big Bears prevailing wage liability was 22 incurred from late August through mid-November 2010. 23 2. Even if Mr. Wong Made The Transfers Without Intending To Hinder 24 Collection, The Transfers Were Voidable Transfers Under The UVTA. 25 Civil Code section 3439.05, subdivision (a) provides an alternate basis for establishing a 26 voidable transfer. It protects creditors who, like TRICO Pipes have claims existing at the time of 27 the transfer. It provides: 28 12 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 A transfer made or obligation incurred by a debtor is voidable as to a creditor 1 whose claim arose before the transfer was made or the obligation was incurred 2 if the debtor made the transfer without receiving a reasonably equivalent value 3 in exchange for the transfer or obligation and the debtor was insolvent as a 4 result of the transfer or obligation. 5 Under section 3439.05, the creditor need not prove that the debtor knew of the creditor’s claim. 6 The creditor need only prove that 1) its claim arose before the transfer; 2) the debtor made the 7 transfer without receiving reasonably equivalent value; and 3) as a result of the transfer, the debtor 8 became insolvent. 9 The essential facts are that Mr. Wong transferred the house to Ms. Wong by deed dated 10 November 26, 2010, eighteen days after he notified the CSLB that he was disassociating from Big 11 Bears. He testified that he disassociated because he feared he would be sued due to Big Bears’ 12 illegal activities and his illegal participation. Ms. Wong is certainly an insider. He testified that he 13 knew there were claims against Big Bears, and he thought that he could be sued because he was 14 “responsible.” (Exhibit 11) Both he and Ms. Wong testified that he received nothing in return. 15 Although there is substantial evidence that Mr. Wong’s intent in making the transfers was to 16 delay, hinder and defraud TRICO Pipes, proof of his intent is not essential for Plaintiffs to recover 17 from Ms. Wong. Even without fraudulent intent, Plaintiffs can recover under Civil Code section 18 3439.05, if the transfers were not in exchange for reasonably equivalent value, and if the transfers 19 rendered Mr. Wong insolvent, then the transferee is liable in damages for the value of the transfers. 20 (Civ. Code § 3439.05; Mejia v. Reed (2003) 31 Cal.4th 657, 664, 670.) 21 3. The Transfers Rendered Mr. Wong Insolvent. 22 Civil Code section 3439.02, subdivision (a) states: 23 A debtor is insolvent if, as a fair valuation, the sum of the debtor’s debts is 24 greater than the sum of the debtor’s assets. 25 Civil Code section 3439.02, subdivision (c) states that for the purpose of determining a 26 debtor’s insolvency under the section, assets do not include those that have been transferred. 27 Mr. Wong was insolvent. While he may not have known the amount of his Big Bears- 28 related debt, he knew it was substantial because he transferred the house shortly after learning of 13 PLAINTIFFS’ TRIAL BRIEF Case No.: CGC-15-546021 1 his exposure. This transfer means that the value of the house cannot be included in Mr. Wong’s 2 assets for this analysis. Mr. Wong’s interest in the savings account is not sufficient to overcome 3 his insolvency. Furthermore, since he fraudulently transferred the account to Ms. Wong, this 4 amount cannot be considered as Mr. Wong’s asset for the purposes of calculating solvency. Mr. 5 Wong’s future salary, as yet unearned, cannot be considered an asset. (Mejia, 31 Cal.4th at 671.) 6 Not only did Mr. Wong give the house to Ms. Wong, but he continued to have his salary 7 directly deposited into the joint account until April 2105. Both Mr. Ms. Wong testified that Ms. 8 Wong had control of the bank accounts even though Mr. Wong’s name was listed as an owner. 9 Mr. Wong claims now that he knew nothing of the Big Bears activities. However, he 10 testified that in 2010 he walked from his house on 27th Avenue to the Parkside Library, one of the 11 Big Bears public works jobs. He met Jack Wang, his co-principal in Big Bears there. 12 Mr. Wong claimed in deposition that he did not know how much “prevailing wages” were. 13 Prevailing wages are determined and published by the Director of Industrial Relations, and reflect 14 union scale. Mr. Wong has been a member of Plumbers and Pipefitters Local Union No. 38 since 15 he became a plumbing inspector in 1998, 12 years before the Big Bears wage liability accrued. His 16 salary is based on Plumbers Union scale wages. Since he knew Big Bears was contracting on 17 public work requiring prevailing wages, and since he knew the prevailing-wage scale was $70 to 18 $88 per hour (depending on the county), he knew