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B. Douglas Robbins (219413)
Kelley Harvilla (275123)
WOOD ROBBINS, LLP
One Post St., Suite 800 ELECTRONICALLY
San Francisco, California 94104 FILED
T: (415) 247-7900 Superior Court of California
F: (415) 247-7901 County of San Francisco
drobbins@woodrobbins.com 04/26/2018
kharvilla@woodrobbins.com Clerk of the Court
BY: MICHAEL RAYRAY
fc iti De Clerk
Attorneys for Petitioner, leputy Cler!
JENNIFER SHUK-HAN KWOK.
IN THE SUPERIOR COURT FOR THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
JENNIFER SHUK-HAN KWOK, Case No. PES-10-293505
individually, and as beneficiary of the Stanley
Kwong Irrevocable Trust II, dated September | REQUEST FOR JUDICIAL NOTICE IN
8, 2008, SUPPORT OF OPPOSITION TO
RESPONDENT JEANNE KWONG’S,
Petitioner, MOTION TO DISMISS FOR FAILURE
TO BRING CASE TO TRIAL
v.
Hearing: May 9, 2017
Time: 2:00 p.m.
JEANNE KWONG, individually and as a Dept.: 204
former trustee of the Stan Kwong Irrevocable Judge: Hon. John K. Stewart
Trust I,
Respondent.
Action filed: May 12, 2010
AND RELATED CROSS-PETITIONS.
Pursuant to California Evidence Code § 452(d) and 453, Petitioner Jennifer Shuk-Han
Kwok respectfully requests that the Court take judicial notice of:
L. Order for Single Assignment, Apr. 7, 2011, for San Francisco Superior Court
Case No. PES-10-293505, attached hereto as Ex. A;
2. Statement of Decision, Sept. 30, 2013, for San Francisco Superior Court Case No.
CGC-10-499028, attached hereto as Ex. B;
3. Stipulated Motion to Return to the Probate Department Three Cases Previously
Singly Assigned to the Hon. Ernest H. Goldsmith (Dept. 613), Mar. 12, 2014, for San Francisco
-1-
RFJN ISO OPP’N TO KWONG’S MTD, CASE No. PES-10-293505Superior Court Case No. PES-10-293505, attached hereto as Ex. C;
4. Order for Assigned Case Management, May 28, 2014, for San Francisco Superior
Court Case No. PES-10-293505, attached hereto as Ex. D;
5. Register of Actions for San Francisco Superior Court Case No. PES-10-293505,
Dec. 12, 2014, attached hereto as Ex. E;
6. Judgment, Jan. 23, 2014, for San Francisco Superior Court Case No. CGC-10-
499028, Ex. F;
7. Mini-Minutes for San Francisco Superior Court Case No. PES-09-293019, Jan.
30, 2015, attached hereto as Ex. G;
8. Petitioner’s Request for Case Management Conference to Set Matter for Trial, for
San Francisco Superior Court Case No. PES-10-293505, Feb. 24, 2016, Ex. H:
9. Respondent Jeanne Kwong’s Objections to Petitioner Jennifer Shuk-Han Kwok’s
Request for Trial Setting on the Insurance Trust Case, for San Francisco Superior Court Case
No. PES-10-293505, Feb. 26, 2016, Ex. I;
10. Mini-Minutes for San Francisco Superior Court Case No. PES-10-293505, June
17, 2016, attached hereto as Ex. J;
11. Minutes for San Francisco Superior Court Case No. PES-10-293505, May 12,
2011, attached hereto as Ex. K; and
12. Joint Status Conference Statement, at 5:24-26, June 13, 2016, for San Francisco
Superior Court Case No. PES-10-293505, Ex. L.
Judicial notice is requested on the grounds that they are records of a court of this state,
San Francisco County Superior Court. Under California Evidence Code § 452, judicial notice
may be taken of “Records of (1) any court of this state or (2) any court of record of the United
-2-
RFJN ISO OPP’N TO KWONG’S MTD, CASE No. PES-10-293505States or of any state of the United States.” Cal. Evid. Code § 452(d).
Respectfully submitted,
Dated: April 26. 2018 WOOD ROBBINS, LLP
ee es
Kelley Harvj
Attorneys {/ Petitioner JENNIFER SHUK-
HAN KWOK
3-
RFJN ISO OPP’N TO KWONG’S MTD, CASE No. PES-10-293505EXHIBIT ASUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
400 MCALLISTER STREET, SAN FRANCISCO, CA 94102
JENNIFER SHUK-HAN KWOK Department 206
PLAINTIFF (S)
vs. NO. PES-10-293505
STAN KWONG IRREVOCABLE TRUST II
Order for Single Assignment
DEFENDANT (S)
TO: ALL COUNSEL AND PARTIES IN PROPRIA PERSONA
IT IS HEREBY ORDERED that this case is singly assigned to Judge ERNEST H. GOLDSMITH for all
purposes.
A case management conference is set for MAY-12-2011 at 10:00 AM in Department 613. CRC 3.725
requires the filing and service of a case management statement form CM-110 no later than 15 days before
the case management conference.
DATED: APR-07-2011 Katherine Feinstein
JUDGE
Order for Single Assignment
Form 000010CERTIFICATE OF SERVICE BY MAIL
I, the undersigned, certify that | am an employee of the Superior Court of California, County of San Francisco and not a party to
the above-entitled cause and that on APR-07-2011 | served the foregoing Order for Single Assignment on each counsel of
record or party appearing in propria persona by causing a copy thereof to be enclosed in a postage paid sealed envelope and
deposited in the United States Postal Service mail box located at 400 McAllister Street, San Francisco CA 94102-4514 pursuant
to standard court practice.
Dated: APR07-2011
CAROLINE K. HINSHAW (095020)
425 CALIFORNIA ST., STE. 900
SAN FRANCISCO, CA 94104
DANIEL T. BERNHARD (104229)
FREELAND COOPER & FOREMAN LLP
150 SPEAR ST., STE 1800
SAN FRANCISCO, CA 94105
EDWARD S. ZUSMAN (154366)
MARKUN ZUSMAN & COMPTON, LLP.
465 CALIFORNIA STREET,5TH FL.,
‘SUITE 500
SAN FRANCISCO, CA 94104
PAUL TOUR-SARKISSIAN (123467)
TOUR-SARKISSIAN LAW OFFICES
211 GOUGH ST., THIRD FLOOR
SAN FRANCISCO, CA 94102
By: ERNALYN BURA
Page 1 of 1
CERTIFICATE OF SERVICE BY MAIL
Form 000010EXHIBIT B-Prepared by
The Court-
ELLED.
SEP 3 0 2013
CLER DF THE COURT
BY:
Deputy Clerk
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
LAU KWONG, individually and as
Trustee of the LAU KWONG TRUST
u/a/d 7/19/98, as amended, LARRY
KWONG, Trustee of the LAU KWONG
TRUST u/a/d 7/19/98, as amended, and
Administrator of the ESTATE OF
HARRY C. KWONG, Deceased,
Plaintiffs,
vs.
JENNIFER SHUK-HAN KWOK, Executor
of the ESTATE OF STANLEY CHONG
KWONG, Trustee of the STANLEY
KWONG AND JENNIFER KWOK
REVOCABLE TRUST u/a/d April 6,
2009, Trustee of the STANLEY KWONG
MARITAL TRUST and other trusts
created under the STANLEY KWONG
AND JENNIFER KWOK REVOCABLE
TRUST u/a/d April 6, 2009; and
individually; JEANNE KWONG, Trustee
of the STAN KWONG TRUST u/a/d April
6, 2009; CALIFORNIA FINANCIAL
MORTGAGE CORPORATION, a
California Corporation, formerly known
as SAN FRANCISCO UNITED
FINANCIAL MORTGAGE
CORPORATION; DOES 1 through 50;
Defendants.
Case No.: CGC-10-499028
Statement of Decision
Department: 613
Judge: Hon. ERNEST H. GOLDSMITH
1 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONThis action came on for trial by the Court pursuant to notice on March 12, 2012
and continued on March 13, 15, 16, 19, 20, 21, 22 and 26, 2012. Plaintiffs were
represented by Carl Lippenberger, Esq. of the Law Offices of Carl Lippenberger, and
Defendants were represented by Daniel T. Bernhard, Esq. of the Law Offices of
Freeland, Cooper & Foreman, LLP. The parties submitted written closing arguments on
April 20, 2012. Reply closing arguments were submitted on April 27, 2012. On August
22, 2012, the Court appointed California Probate Referee Michael Kasolas to perform
the referee and accounting services. The Court issued its Tentative Statement of
Decision on July 12, 2013. Pursuant to California Rules of Court, Rule 3.1590, the
parties filed the following pleadings: Defendants’ Response to Tentative Decision filed
July 19, 2013; Plaintiffs’ Memorandum of Points and Authorities in Opposition to
Objections to Tentative Statement of Decision filed July 29, 2013; Plaintiffs’ Request for
Statement of Decision; Proposed Content of Statement of Decision filed July 29, 2013;
Defendants’ Response to Plaintiffs’ Request for Statement of Decision; Proposed
Content of Statement of Decision filed August 13, 2013; and Plaintiffs’ Reply
Memorandum of Points and Authorities in Support of Request for Statement of Decision
and Proposed Content of Statement of Decision filed August 27, 2013. The Court has
considered all pleadings submitted in this case, the evidence introduced at trial through
oral testimony and exhibits, accountings, and arguments. Accordingly, the Court issues
this Statement of Decision.
I. FACTUAL OVERVIEW
Plaintiffs Lau Kwong (“Lau”), individually and as trustee of the Lau Kwong Trust,
and Larry Kwong, as trustee of the Lau Kwong Trust and administrator of the Harry C.
Kwong Estate (“Harry's estate”), (“Plaintiffs”) filed this lawsuit against Defendants
Jennifer Shuk-Han Kwok (‘Jennifer’), as executor of the Estate of Stanley Kwong,
trustee of the Stanley Kwong Trust, trustee of the Stanley Kwong Marital Trust and other
2 4 CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONtrusts created under the Stanley Kwong and Jennifer Kwok Revocable Trust, and trustee
of the Stan Kwong Trust, and California Financial Mortgage Corporation (“Defendants”).
Plaintiffs are the mother and brother of Stanley Kwong (“Stan”). Stan died on July 8,
2009. A probate action, filed on August 31, 2009, followed his death. In the probate
action, both Lau and Harry’s Estate filed claims against Stan’s Estate in December 2009
as well as January 2010. The claims were rejected on January 28, 2010.
In light of this rejection, Plaintiffs filed this lawsuit. Plaintiffs maintain that Stan
owed them a fiduciary duty in the management of their affairs and property. Plaintiffs
asked this Court to conduct an accounting and find that Stan held certain properties in
trust for them. Specifically, Plaintiffs claim rights in three properties named in Stan’s
Estate and managed by and wholly or partially titled in Stan’s name — (1) the Walnut
property; (2) the Union property; and (3) the Van Ness property. Plaintiffs assert their
rights to these properties pursuant to a resulting trust theory. In particular, Plaintiffs lay
out their claims with respect to their resulting trust argument as follows in their closing
argument brief:
Lau claims: (1) an order for conveyance of the record title interest in the Walnut
and Union properties now held by the trustee of Stan Kwong Trust; and (2) payment of
Lau’s 42% interest in the Van Ness property.
Harry’s Estate claims: (1) an accounting of the rents and refinancing proceeds for
Harry's Estate 9% interest in the Van Ness property; and (2) payment for Harry’s Estate
9% interest in the Van Ness.
In their complaint, Plaintiffs clarify that they ask the Court’s judgment to declare
that the trustee of the Stan Kwong Trust holds title to these properties as trustee of a
resulting trust for Plaintiffs. Defendants oppose Plaintiffs’ claims. It is Defendants’
3 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONwn
xy
position that the natural presumption that a resulting trust results in the favor of a payor
of the purchase price of property titled in another’s name does not apply in this case.
Instead, since the parties involved in this action are family members, Plaintiffs must
overcome the presumption that any transfer in property is a gift. And, they must do so by
clear and convincing evidence. The question presented in this case is whether the
evidence satisfies these burdens. Further, Defendants have asserted several affirmative
defenses in their answer’ and reiterated their defenses during the course of the
proceedings. In particular, Defendants claim that the applicable statute of limitations as
well as the doctrine of laches bars Plaintiffs’ claims.
Il. BACKGROUND
Lau and her husband Chong Kwong (“Chong”) were immigrants from China.
Chong came to San Francisco in about 1920 and worked as a night janitor in bars and
restaurants in San Francisco’s Chinatown. After World War Il, he went to China and
married Lau with whom he returned to San Francisco in 1948. They had four children,
Stan (deceased), Larry, Jeanne, and Harry (deceased). Lau worked alongside Chong
and also in sewing factories. They lived frugally and saved small amounts of money on
a continuous basis which they deposited in several local banks and accumulated
substantial savings in relation to their modest employment. Despite their modest
financial situation they managed to provide the means for college education for each of
their children. Larry became an engineer, Jeanne entered the public health field, and
Stan entered the real estate and loan business after graduation.
' See page 7 of Defendants’ answer filed on January 18, 2011.
4 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONAt Stan’s urging, Lau and Chong used part of their savings to put a down payment
on the 343 Walnut Street property, a six-unit apartment building which was purchased in
1976. Lau and Chong were unable to obtain a real estate loan due to their low salary
levels and Larry and Jeanne who were professionally employed took title to the property
along with their parents. This purchase was followed in 1981 by a purchase of a four-
unit apartment building at 1248 Union Street. Larry took title with Lau and Chong to
facilitate financing. Chong quitclaimed his interest in both properties to Lau, presumably
for estate planning purposes. Larry conveyed his interest in the two properties to Stan in
1993 and 1994 and received some of the proceeds from refinancing which he did not
wish to remain obligated for. He used those proceeds to invest in other properties
owned solely by him and his wife. Some of the refinancing proceeds were used by Stan
to purchase the Van Ness Avenue property which was a commercial building thereafter
used by Stan for his real estate and loan brokerage business.
Stan accumulated a large real estate portfolio up to the time of his death in 2009
estimated at between ten and twenty million dollars separate from the properties in
dispute. Stan bequeathed all of his holdings including his interests in the disputed
| properties and their proceeds to his wife and Defendant, Jennifer, pursuant to a
professionally drafted estate plan. Jennifer had been employed by Stan in his real
estate and loan business, California Financial Corporation, prior to their marriage and
continued as a principal in the business during their marriage which produced two
children.
Lau, Larry, and Jeanne testified that they expected Stan to include them, or at
least Lau, in his estate plans in recognition of the ownership interests now claimed in this
lawsuit. These expectations were founded on alleged understandings within the family
5 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONwhich reflected the fact that Stan was a real estate and finance expert and that Stan’s
holding title to the properties and managing their proceeds made it possible to refinance
and reinvest, as Lau’s income would not support Stan’s aggressive reinvestment
program. In addition, Stan had the expertise to professionally manage these properties.
Plaintiffs claim Stan did not reflect the family understanding in testamentary plans due to
pressure from Jennifer during the illness preceding his death to leave everything to her.
Accordingly, Plaintiffs bring this lawsuit to effectuate the alleged intentions of Stan, Lau,
Jeanne, and Larry with respect to the three subject properties and their income and
refinancing proceeds.
Ill. RESULTING TRUSTS
A resulting trust is implied by law to carry out the intention of the parties. The
claimant has the burden of proving the existence of a trust by clear and convincing
evidence. When a court finds that a resulting trust is an appropriate remedy, the court
declares that the person named in the deed is a resulting trustee and orders the trustee
to manage and/or dispose of the property in dispute to the beneficiaries in accordance
with the court's equitable determination.
Both the statute of limitations and the laches defense may limit a claimant's ability
to file a lawsuit, seeking a resulting trust. Specifically, the four-year statute of limitations
applies to resulting trusts. Laches may also bar the claim, irrespective of whether the
statute of limitations has run on the action at law.
Ultimately, this Court concludes that while neither the statute of limitations nor
laches defense bars their claims, the Plaintiffs have failed to sufficiently demonstrate that
the Stan Kwong Trust holds the title to the Walnut, Union, and Van Ness properties as
6 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISION27
28
trustee of a resulting trust for Plaintiffs. Plaintiffs did not meet their burden of proving the
existence of a trust by clear and convincing evidence.
A. Legal Basis of Resulting Trusts
A resulting trust arises by operation of law from a transfer of property under
circumstances showing that the transferee was not intended to take the beneficial
interest. (Lloyds Bank California v. Wells Fargo Bank (1986) 187 Cal.App.3d 1038,
1042.) One who claims a resulting trust in land must present clear and convincing
evidence of a trust. (/d. at 1044.) If the claimant does not, then the presumption of
ownership arising from the legal title is not overcome and a resulting trust will not be
declared. (/d. at 1045.)
Ordinarily a resulting trust arises in favor of the payor of the purchase price of the
property where the purchase price is paid by one person and the title is taken in the
name of another. (/d. at 1043.) The trust arises because it is the natural presumption in
such a case that it was their intention that the ostensible purchaser should acquire and
hold the property for the one with whose means it was acquired. (/d.) However, the
focus is not solely on who paid the purchase price. The Supreme Court keenly noted:
[A] resulting trust is not founded on the simple fact that
money or property of one has been used by another to
purchase property. It is founded on a relationship between
the two, on the fact that as between them, consciously and
intentionally, one has advanced the consideration wherewith
to make a purchase in the name of the other. The trust arises
because it is the natural presumption in such a case that it was their
intention that the ostensible purchaser should acquire and hold the
property for the one with whose means it was acquired.
(Majewsky v. Empire Constr. Co., Ltd. (1970) 2 Cal.3d 478, 485.)
There are exceptions to this doctrine. It is well settled that one exception to the
rule is found in transactions between parent and child. (Lloyds Bank California, 187
CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONw
Cal.App.3d at 1043.) These transactions are presumed to be in the nature of gifts,
advancements or bounties. In short, the existence of the relationship of parent and child
is a circumstance which prima facie establishes the presumption of advancement and
thereby rebuts the presumption of a resulting trust. (/d.)
There are other exceptions as well. For instance, a payment by one person of the
purchase price for a transfer to another does not give rise to a resulting trust where
| consideration for the payment is furnished by the grantee, such as, for example, where
the payment is made in return for personal services rendered by the grantee to the
payor. (See Finnegan v. Hemandez (1946) 74 Cal.App.2d 51.) However, the
performance by the grantee of services to the payor consisting merely of the courtesies
that are commonly rendered by one person to another without promise or hope of
reward, and that have no pecuniary value, does not represent any such consideration as
would prevent a resulting trust in favor of the payor. (See Frazure v. Fitzpatrick (1943)
21 Cal.2d 851.)
Likewise, one who furnishes the consideration with which another makes a
purchase of property is not entitled to a resulting trust if the transaction was a loan from
the person furnishing the consideration to the purchaser, who made the purchase on his
or her own behalf with the consideration so obtained. (Vogel v. Bankers Bldg. Corp.
(1952) 112 Cal.App.2d 160, 168.) Thus, a trust claimant who advances money for the
purchase of property waives the implied trust in his or her favor, which is an equitable
lien raised by operation of law, when the claimant takes a deed of trust as security for the
money advanced. (See Tripp v. Duane (1887) 74 Ca.85.) However, a trust claimant
who furnishes part of the purchase price may have a resulting trust in his or her favor,
though the claimant takes a note and trust deed from the grantee, where the property is
8 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONwn
purchased pursuant to an oral understanding that each should have a one-half interest,
and the note and trust deed are intended merely as evidence of the claimant's
contribution. (Melickian v. Halstead (1953) 121 Cal.App.2d 469, 472.) In the instant
case there were no deeds of trust conveyed by Stan to Lau.
There is also the situation of partial payments. The law recognizes that partial
payment of the consideration for property may give rise to a resulting trust to the extent
of the payment. (Lloyds Bank California, 187 Cal.App.3d at 1044.) However, the burden
is again on the party who asserts a pro tanto trust to establish with definiteness and
specificity the proportional amount contributed. (Id.) It is noted that the interest in which
a person who has paid part of the purchase price can claim a resulting trust will ordinarily
be proportional to the fraction of the whole purchase price represented by his or her
payment. (Gerstner v. Scheuer (1949) 91 Cal.App.2d 123, 127.) There are undoubtedly
many cases in which payments of unequal sums by purchasers do not indicate the
acquisition of unequal interests. (Breitenbucher v. Oppenheim (1911) 160 Cal. 98, 104.)
The extent of the interest acquired by the trust claimant may, in certain circumstances,
be affected by agreement. (Neusted v. Skernswell (1945) 69 Cal.App.2d 361, 364.) In
addition, the proportional payment of consideration at the time of conveyance must be
distinguished from subsequent monetary contributions to make improvements on
property or for installment payments after title has already been acquired, which do not
secure an interest by way of a resulting trust. (Martin v. Kehl (1983) 145 Cal.App.3d
228, 239.)
In re the instant case there were no formal agreements defining the financial
relationship between Lau and Stan. There were numerous inter-family transfers during
the more than three decades since Lau first provided a down payment for Walnut Street.
9 } CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONoe ND
Again, no documentation provided a roadmap to the parties’ intentions. Defendant
Jennifer Kwok argues that notwithstanding the lack of written agreements or
documentation, the transfers of title by Stan to Lau which took place constituted full
payment to Lau based on her investments.
B. The Statute of Limitations and the Doctrine of Laches
Before examining the merits of Plaintiffs’ claim, the Court considers whether of the
defenses asserted by Defendants bar the action. In particular, Defendants assert two
defenses that are relevant to Plaintiffs’ resulting trust claims: (1) that the action is barred
by the applicable statute of limitations; and (2) that the action is barred by the doctrine of
laches.
Both of these defenses relate to the timing of the filing of the lawsuit. A case that
requests a court to impose a resulting trust is subject to both the statute of limitations as
well as the doctrine of laches. (/d. at 240.) Specifically, a claimant must bring the action
within the four-year statute of limitations. (McCosker v. McCosker (1954) 122
Cal.App.2d 498, 501; Code Civ. Proc., § 343.) The period commences to run on the
claimant’s actual knowledge of repudiation or breach of the trust. (/d.) The doctrine of
laches may also bar a claimant's action — irrespective of whether the statute of limitations
has run on the action at law. (Martin, 145 Cal.App.3d at 240.) In contrast to the statute
of limitations, laches is an affirmative defense. (/d.) It specifically requires a showing of
unreasonable delay in bringing suit plus either acquiescence in the act about which
plaintiff complains or prejudice to the defendant resulting from the delay. (/d.) Prejudice
is never presumed; rather it must be affirmatively demonstrated by the defendant in
order to sustain the burden of proof and the production of evidence on the issue. (/d.)
10 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONCase law appreciates that this defense is usually not applied strictly between near
relatives. (Berniker v. Berniker (1947) 30 Cal.2d 439, 448.)
The statute of limitations defense does not bar this action. The law provides that
Plaintiffs needed to bring their action within the four-year statute of limitations.
(McCosker, 122 Cal.App.2d at 501; Code Civ. Proc., § 343.) The period commences to
run on the claimant's actual knowledge of repudiation or breach of the trust. (/d.) Here,
the properties were purchased several years ago, in 1976, 1981, and 1990. Also, the
facts are not clear about whether Stan or Defendants repudiated or breached any trust
agreement between the parties and that Plaintiffs had actual knowledge of such acts.
The Court finds that Plaintiffs gained actual knowledge in 2009 or early 2010, when
Stan’s probate action was filed and his estate formally rejected Plaintiffs’ claims on
January 28, 2010. Thus, Plaintiffs had four years from this time to file this lawsuit, and
they did — they filed this lawsuit on April 23, 2010.
The doctrine of laches also does not bar this action. The law provides that the
doctrine of laches may bar a claimant's action irrespective of whether the statute of
limitations has run on the action at law. (Martin, 145 Cal.App.3d at 240.) Here, this
means that even though the statute of limitations had not run before Plaintiffs filed their
suit, their case still may be untimely on equitable grounds. Defendants argue that the
doctrine of laches clearly applies. They point to several facts in support. The parties
have been engaging in transactions with each other for over thirty years and any
suspicion about Stan’s actions should have been addressed sooner. Stan relied on the
history of his dealings with his family members and it would greatly prejudice his estate if
Plaintiffs could succeed with their claims. Also, Plaintiffs did show some concern about
Stan’s actions in the past in 1994 and this concern was addressed by Larry’s wife, Betty
11 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONwho is an accountant, by conducting an accounting. No claims or disagreements about
the properties arose then. Although this evidence may appear to have prejudiced
Defendants due to delay, the Court notes that prejudice is never presumed; rather it
must be affirmatively demonstrated by Defendants in order to sustain the burden of proof
and the production of evidence on the issue. No evidence of prejudice has been offered.
(/d.) Furthermore, case law appreciates that the defense of laches is usually not applied
strictly between near relatives. (Berniker, 30 Cal.2d at 448.) Accordingly, the Court finds
that the doctrine of laches does not bar Plaintiffs’ claims.
Cc. Analysis
Now, the Court separately examines each of the three properties to determine
Lau and Harry's Estate’s interests in them and the parties rights to a resulting trust or
not.
1. The Walnut Property
The law holds that there is a presumption of ownership arising from legal title.
(Lloyds Bank California, 187 Cal.App.3d at 1045.) Here, the Walnut property is currently
titled in Lau and Stan’s name — the Lau Kwong Trust has a two-thirds interest in the
property and the Stan Kwong Trust has a one-third interest in the property. Thus, there is
a presumption that both trusts are owners of the property.
The Court offers a point of clarification regarding Lau’s interest in the property and
its impacts on this litigation before evaluating Plaintiffs’ attack on Stan’s ownership
status, which is the primary focus of this litigation. The parties disagree whether Lau
possesses a one-third or two-third interest in the property. As of a grant deed dated
January 14, 2008, Jeanne possessed a one-third interest in the property. She transferred
her one-third interest to Lau by quitclaim deed on January 4, 2010. (Trial Exhibit 9; RT
12 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISION196.) There is no dispute that the deed is unrecorded. And, the recordation does not
affect the validity of the deed. (Civ. Code, § 1217 [“An unrecorded instrument is valid as
between the parties thereto and those who have notice thereof.”].) Further, the Court
finds that there is no issue as to whether the deed was properly delivered, which is an
essential element. (Civ. Code, § 1054 [“A grant takes effect, so as to vest the interest
intended to be transferred, only upon its delivery by the grantor.”].) Jeanne testified that
she delivered the Walnut deed to Lau. (RT 363-64.) Moreover, since the deed was duly
executed and acknowledged, it is presumed to have been delivered on the date it bears.
(Civ. Code, § 1055 [“A grant duly executed is presumed to have been delivered at its
date.”]; Trial Exhibit 9.) Defendants have not overcome this presumption or put forth
evidence to outweigh Plaintiffs’ evidence. For all of these reasons, the Court holds that
Lau has a two-thirds interest in the Walnut property by way of Jeanne’s January 4, 2010
quitclaim deed and that this was the extent of her interest at the time of filing this
litigation.
This conclusion has significant impacts on this case, particularly to the extent of
Plaintiffs’ potential recovery. In addition to finding that Jeanne conveyed her interest in
the property to Lau, the Court also concludes that Jeanne conveyed her right to sue
based on this interest to Lau. In particular, Jeanne conveyed her right to recover the
rents and refinancing proceeds to Lau. As a result, Plaintiffs are entitled to potentially
recover all rents and proceeds from the entire two-thirds interest, not just Lau’s original
one-third interest in the property.
This finding stems from a cotenant'’s rights and the nature of assignments. The
law permits cotenants to seek certain remedies from each other. Relevant to this case,
cotenants can pursue actions for accounting. (Hunter v. Schultz (1966) 240 Cal.App.2d
13 || CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONoC em ND
24, 30.) The right to an accounting inures to the cotenant as soon as proceeds or profits
are collected. (Willmon v. Koyer (1914) 168 Cal. 369.) Although the right to an
accounting is a type of present interest that a cotenant acquires, the cotenant has the
authority to assign this right pursuant to law governing assignments. (Civ. Code, § 954
[‘A thing in action, arising out of the violation of a right of property, or out of an obligation,
may be transferred by the owner.”].) Furthermore, the law requires no particular form to
make an assignment. (Cockerell v. Title Ins. & Trust Co. (1954) 42 Cal.2d 284, 291.) For
instance, a cotenant's oral assignment may be sufficient so long as there is a
manifestation to another person by the cotenant, or the owner of the right, indicating her
intention to transfer the right to another person. (/d.; Civ. Code, § 1052 [“A transfer may
be made without writing, in every case in which a writing is not expressly required by
statute.”].) And here, the facts support the finding that Jeanne transferred her right to sue
to Lau. At trial, Jeanne testified that she transferred her interests to Lau and never
believed that she had a claim to maintain against Stan. (RT 196.) Lau’s provided similar
testimony on this issue, claiming that she owns all of the Walnut property and thereby
acknowledging Jeanne’s conveyance of property and cotenant rights. Thus, Plaintiffs are
entitled to potentially recover all rents and proceeds from the entire two-thirds interest?
The Court now refocuses on Plaintiffs’ challenge to Stan’s ownership status.
Plaintiffs disagree that Stan is an owner of the property. It is their contention that he was
always holding the one-third interest as a trustee for the benefit of Lau. For Plaintiffs to
succeed on this argument, it is their burden to overcome the presumption that arises
from legal title. Plaintiffs believe that they have. They point to the law of resulting trusts
? The accounting performed in this case was conducted in accordance with these findings: that Lau has a two-thirds
interest in the property and that Jeanne conveyed her right to sue to Lau.
14 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONfor support. A resulting trust arises in favor of the payor of the purchase price of the
property where the purchase price is paid by one person and the title is taken in the
name of another. (Lloyds Bank California, 187 Cal.App.3d at 1043.) Plaintiffs maintain
that Lau provided the purchase money for the Walnut property. As a result, she has
successfully overcome the presumption of legal title, i.e. Stan’s one-third interest, with
the payment of the purchase price. Although her children took a record title interest in
the property, which was eventually conveyed to Stan, the parties always intended that
Lau would have the entire beneficial interest of the property. Also, Lau testified that she
considers herself the sole owner of Walnut Street.
Defendants argue that Plaintiffs’ understanding of the legal presumptions is
misplaced. Plaintiffs overlook an exception to the payment of purchase price
presumption, i.e. the exception that stems from family relationships. Transactions
between parents and children, including those involving real property, are presumed to
be in the nature of gifts. (/d.) In fact, the existence of the relationship of parent and child
is a circumstance which prima facie establishes the presumption of an advancement and
thereby rebuts the presumption of a resulting trust. (/d.) Thus, the situation before this
Court is more complicated for Plaintiffs than they suggest. The Court must consider if
any transactions between the Kwong family members were gifts, not instances of
resulting trusts. For the Court declare a resulting trust, Plaintiffs must overcome this
presumption with clear and convincing evidence. (/d. at 1044.)
The Court finds two cases highly persuasive in weighing the evidence presented
at trial and determining that Plaintiffs have ultimately not overcome this presumption,
Faylor v. Faylor (1902) 136 Cal. 92 and Johnson v. Johnson (1987) 192 Cal.App.3d 551.
Both of these cases involve transfers of real property between parents and children
15 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONon a
where the court ultimately found that the parties intended that the children hold the
property as trustee of a resulting trust for their parents. The facts of these cases are
significantly distinct from those in the Kwong family, as they reveal a clear intent between
the parties that the property was to be held in trust.
In Faylor, a father and son both contributed money towards the purchase price of
a piece of property. (Faylor, 136 Cal. 92 at 93-94.) The son took title to the property
solely in his name. (/d.) The court concluded that the parties’ intent was that the son
held part of the title in trust for his father. (/d. at 93.) There was significant evidence
presented about this intent at trial. The father testified about his agreement with his son.
(Id. at 94-95.) The seller of the property confirmed this agreement. (/d.) He also
provided additional testimony, revealing the father’s great interest in and commitment to
securing the property. (/d.) The seller noted that the sale was wholly with the father.
(/d.) During the time of the sale, however, the father had planned an out-of-state trip.
(/d.) To quickly finalize the deal, the father asked his son to carry out the transaction in
the son’s name. (/d.) It was clear to the court that all of this evidence fully supported the
findings as to the real intention of the parties — that the son held that property in trust for
his father.
The intention of the parties to establish a trust was similarly evident in the
Johnson case. There, the Johnson parents decided to purchase a home near their son.
(Johnson, 192 Cal.App.3d at 554-55.) They were financially stable and able to afford the
purchase price of a new home. (/d.) Nevertheless, their son wanted to help them secure
discounted financing. (/d.) As a veteran, he was eligible for GI loan financing and urged
his parents to let him use that method to purchase the property. (/d.) His parents
agreed. (/d.) The only catch was that title needed to be taken in the son’s name since
16 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONhe was the only one eligible for the GI loan. (/d.) The parties understood, however, that
the Johnson parents were he actual and beneficial owners of the property. (/d.) And,
they paid all of the costs associated with the home, although they transferred their
mortgage payments through their son since all of the financing was processed through
his name. (/d.) The son only lived in the home for a short time after he separated from
his wife. (/d.) It was then that he attempted to sell the home and refused to transfer title
to his mother. (/d.) The court held that son’s actions deviated from the parties’ intended
agreement and declared that he held the property in trust for his parents, preventing the
son from ousting his mother and selling the home.
With these cases in mind, the Court examines the evidence presented in the
Kwong case. The Kwong family purchased the Walnut property in 1976. In their closing
argument brief, Plaintiffs argue that the following evidence clearly and convincingly
shows that Stan held his one-third interest in the property in resulting trust for Lau:
1. Betty Kwong (Larry’s wife) traced the down payment to accounts in the name
of Lau or Larry, Stan, and/or Jeanne. Plaintiffs argue that the funds in these
accounts belonged to Lau — and thus she provided the purchase price of the
Walnut property — because the pass books for these accounts show a long
history of small monthly deposits that accumulated over a very long period of
time. Plaintiffs’ Exhibit 13 (RT 522 and RT 526) in support of this argument.
2. Lau, Larry, and Jeanne testified that Lau and Chong paid the purchase money
from their savings and that Lau owns Walnut. (RT 41-42, 44, 187, 275.)
3. Jeanne may have contributed a small amount of money for the down payment,
but this was a gift. (RT 187.) Larry, Stan, and Jeanne did not have any
17 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONmoney to contribute to the purchase. They were in their early twenties, living
at home, and did not have time to accumulate money. (RT 188, 206.)
. Upon purchase, the property was titled in Lau, Jeanne, and Larry's name,
each having a one-third interest in the property. Larry and Jeanne testified
that they only took a record title interest to help Lau qualify for a loan. (RT 43,
190.) They had no understanding that they each had received a gift from their
parents and contend Lau did not gift the property to them. (RT 44, 191.) They
also noted that they never received any of the rent payments from the
property. (RT 50, 191.)
. In 1993, Larry conveyed his interest to Stan, not receiving any consideration
for the transfer. Stan was managing the buildings and wanted to refinance the
property. Larry did not want to refinance. (RT 50-51.)
. Larry did receive money in 1994 from Lau. Plaintiffs argue that this money
was an advance of Larry’s inheritance and that it did not bear on any interest
he had in the title in the Walnut property. Plaintiffs point the Court's attention
to Exhibit 7 as well as Jeanne’s testimony (RT 359-60) and Betty's testimony.
(RT 493-94.)
. According to Larry, Stan allegedly stated that the Walnut property was a
“family building”, and that the family had agreed that the property be in full
financial control by the parents strictly for their benefit and use.” (Exhibit 11,
RT 195, 205-06, 384-85.)
. The business registration, insurance, and scavenger service were in Lau’s
name. (Exhibits 2-4.) The Permit of Occupancy, dated 1977, is also in Lau’s
name. (RT 396.)
CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONDefendants also presented some evidence in regards to this property. They
presented the tax returns for the property, which Stan filed and indicated that Lau is only
a partial owner of the property. Defendants also point out that Jeanne admitted that she
contributed $2,000 to the purchase price of the property.
After reviewing all of these facts, the Court finds that Plaintiffs have not presented
clear and convincing evidence that Stan’s one-third interest in the Walnut property is
being held in trust for Lau. There is substantial conflicting evidence about the source of
the money used to purchase the property, whether the property was a gift to Lau’s
children, and whether Stan understood that he was anything except a partial owner of
the property.
The burden is on the party who asserts that a trust exists to establish with
definiteness and specificity the proportional amount contributed. (Lloyds Bank of
California, 187 Cal.App.3d at 1044.) Plaintiffs have not done that. Plaintiffs traced the
down payment to the Walnut property from accounts in the name of Lau or Larry, Stan,
and/or Jeanne. Although Plaintiffs argue that the money in these accounts belonged
only to Lau and thus that she provided the purchase money, the names on the account
show otherwise. It is unclear who of Lau and her children put the money into these
accounts and what money was actually used towards the purchase price. Further, there
is conflicting evidence about whether Jeanne contributed $2,000 to the down payment.
All of this evidence demonstrates that there is no clarity as to the most basic issue in
resulting trust cases, that there is a clear payor who put forth the purchase price of the
property. (/d. at 1043.)
The question remains, have Plaintiffs overcome the presumption that the property
may have been a gift from Lau to her children. (/d. at 1043.) Plaintiffs have not
19 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONpresented clear and convincing evidence that Lau intended that the property be held in
trust for her. However, the Court finds little support for Defendant’s argument that Lau
intended her payments as gifts to Stan. Lau claims that the property including Stan’s
one-third interest belongs to her. Yet, she decided to initially title the property in her
name and Larry and Jeanne’s names. On this issue, Larry and Jeanne offered
confusing testimony about whether this transfer was a gift. They testified that that they
did not understand that they had received a gift from their parents. Jeanne stated that
any contribution of her part to the down payment was a gift. This means that the family
would regard one transfer as a gift and not another. Furthermore, it appears that Stan
understood that he was a partial owner of the property and not holding the property in
trust for Lau. The mother and son carried on as co-owners. The business registration,
insurance, scavenger service, and Permit of Occupancy were in Lau’s name. In
contrast, Stan was responsible for filing the tax returns, which described Lau and Stan as
co-owners and for paying the taxes. There is no claim that Lau paid any of the taxes.
Unlike the Faylor and Johnson cases, there is no clear indication that Lau definitively
intended the entire property to be held for her benefit regardless of status of title.
Underlying these conclusions, the Court finds that Plaintiff's testimony is not
sufficiently persuasive. The Court is the fact finder in this case. It is charged with
ultimately weighing the credibility of the testimony (Evid. Code, § 780), as well as any
prejudice that results from evidence about statements that Stan, the relevant deceased
party in this action, made. (Evid. Code, § 1261.) Lippert v. Pacific Sugar Corp. (1917)
33 Cal.App. 198 recognizes that unsupported testimony of one person as to declaration
of a decedent is the weakest of all evidence. And, the instant case has elements of self-
interest given that Larry and Jeanne are Lau’s probable heirs. Most importantly, the
20 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONCourt must critically consider Stan’s alleged statements about the property being a family
building in trust offered by Plaintiffs given that Stan is now deceased and cannot offer
contrary evidence.
For all of these reasons, the Court holds that Plaintiffs have failed to sufficiently
demonstrate that Stan’s one-third interest in the Walnut property was held in trust by
Stan for Lau. Stan acquired the one-third interest from Larry for which Larry received
money from Lau as an advance on his inheritance. These inter-family transfers suggest
Larry held one-third as a testamentary gift from Lau and the Court finds the interest
retained its testamentary gift character when transferred to Stan in the context of
refinancing.
2. The Union Property
Considering the law explained above, the Court examines the evidence offered
about the Union property to determine whether Plaintiffs have met their burden in proving
that Stan’s interest in the Union property was held in trust by Stan for Lau or if a different
relationship was created.
There appears to be no dispute between the parties about who currently holds
title to the Union property, the Lau Kwong Trust has a 95% interest in the property and
the Stan Kwong Trust has a 5% interest in the property. The only dispute is over
whether Stan Kwong’s Trust holds the 5% interest as trustee for Lau. The evidence
presented at trial does not rise to the clear and convincing level to find that Stan holds
his 5% in trust for Lau.
The Kwong family purchased the Union property in 1981. Plaintiffs maintain that
the following evidence shows that Stan held his interest in the property in resulting trust
for Lau. They point to the following:
21 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISION1. Betty traced the down payment to Lau’s funds. Most of the down payments
came from accounts in Lau’s name. Any other payments, including those
from Jeanne and Larry, were gifts. Some of the down payment came from
Stan, but these funds were a reimbursement of funds that Stan previously
received from Lau. (Exhibit 14, RT 529-36.)
2. Stan did not have any money to contribute to the Union purchase. (Exhibit 14,
RT 535-36.)
3. Upon purchase, the property was titled in Lau and Larry's names, each having
a one-half interest in the property. Larry testified that he was only included in
the title to help qualify for the purchase money loan because he was well
employed at the time, and that he did not believe he had received a gift from
his parents. He also did not receive any rents from the property. (RT 51-52,
55.)
4. The lender identified Lau as the “new owner.” (Exhibit 8.)
5. Lau, Larry, and Jeanne testified that Lau owns the property. (RT 52, 277.)
6. Larry testified that Stan allegedly stated “it has been our family’s trust
agreement that the property be in full financial control by my parents strictly for
their benefit and use.” Stan also allegedly told a friend it was a “family
building.” (Exhibit 11, RT 195, 205-06, 384-85.)
Additional evidence also came out at trial about this property. Betty recorded in
her 1994 accounting summary payments by Jeanne (in the amount of $10,000), by Larry
(in the amount of $15,000), and Stan (in the amount of $47,500) towards the purchase
price of the Union property. Through the years, there a also several transfers of title
in the property. In 1981, Lau transferred her 50% interest to Stan. Stan transferred a
22 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISION10% interest back to Lau in 1993. In 1994, Larry transferred 45% of his one-half interest
to Stan and 5% to Lau. In 1995, there were another set of transfers in which Larry
gained an 80% interest, Lau a 15%, and Stan a 5%. There were a few more transfers,
ultimately ending with the Lau Kwong Trust possessing a 95% interest and the Stan
Kwong Trust possessing a 5% interest. The conditions or terms under which the
transfers were made provide no evidence of the grantor's intent.
Like the Walnut property, there is conflicting evidence about the source of the
money used to purchase the property, whether the property was a gift to Lau’s children,
and whether Stan understood that he was anything except a partial owner of the
property. There is conflicting testimony as to whether Lau possessed the funds for the
purchase or to meet expenses not covered by cash flow.
The evidence shows that several people contributed to the purchase price: Lau,
Larry, Jeanne, and Stan. Plaintiffs argue Larry and Jeanne’s payments were gifts and
that Stan did not actually contribute anything. The Court finds little certainty resulting
from the testimony including the conflicting evidence whether Lau paid for the property.
Plaintiffs have also not overcome the presumption that any transfers between the
family members were gifts, or that in the alternative they were loans. Lau claims that the
property belonged to her. Yet, she decided to initially title the property both in her name
as well as in Larry's name. Plaintiffs admit that Larry and Jeanne may have contributed
money to the purchase price, but they only view these as gifts. Also, they deny that Stan
had any involvement in the purchase of the property and argue that any transfer was not
a gift. Uncertainty is compounded by the fact that the family regards one transfer as a
gift and not another. Furthermore, it appears that Stan understood that he was a partial
owner of the property. Thus, unlike the Faylor and Johnson cases, there is no clear
23 | CGC-10-499028/K WONG v. KWOK/STATEMENT OF DECISIONindication that Lau definitively intended the property to be held for her benefit rather than
as gifts or that her contributions were loans to Stan.
Each witness testified from the standpoint of self-interest. Also, t