Buta Buddhism Research Center v. Lai CA2/2

Filed 5/27/21 Buta Buddhism Research Center v. Lai CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has
not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
BUTA BUDDHISM RESEARCH B297255
CENTER,
(Los Angeles County
Plaintiff and Appellant, Super. Ct. Nos. BC548643 &
BC551652)
v.
YEN CHUAN HOU LAI, as
Administrator, etc.,
Defendant and
Respondent.
BUTA BUDDHISM RESEARCH
CENTER,
Cross-complainant and
Appellant,
v.
CHI-LI HOU,
Cross-defendant and
Respondent.
APPEAL from judgments of the Superior Court of Los
Angeles County, David S. Cunningham, Judge. Affirmed in part
and reversed in part.
Hammers and Stephen G. Hammers for Plaintiff and
Appellant and Cross-complaint and Appellant.
Cohen Law Firm and Randall A. Cohen for Defendant and
Respondent Yen Chuan Hou Lai.
Peter C. Chen and Arnold Freedland for Cross-defendant
and Respondent Chi-Li Hou.
******
Buta Buddhism Research Center (BBRC) appeals from a
final judgment involving two consolidated matters. One is a
quiet title action, originally involving several properties, brought
by BBRC against Yen Chuan Hou Lai (Lai), administrator of the
estate of Hsin Jen Hou (Hou or decedent). By the end of the quiet
title trial, the only property involved was 14425 Gale Avenue,
Hacienda Heights (the Gale property). At the completion of
BBRC’s presentation of evidence, the trial court granted a motion
for judgment in favor of Hou’s estate, ruling that BBRC had
failed to meet its burden of proof. The court quieted title to the
Gale property in favor of Hou’s estate.
The other matter is a quiet title action brought by BBRC
against Chi-Li Hou (Chi-Li)1 (daughter of the decedent) involving
a property on 4101 S. Nogales Street in West Covina (the Nogales
property). Following its consideration of Chi-Li’s motion for
1 Because Chi-Li shares the same surname as the decedent,
she will be referred to as Chi-Li for clarity. No disrespect is
intended.
2
summary adjudication, the trial court found that Chi-Li was and
remains the sole owner of the Nogales property, and quieted title
in her favor.
BBRC appeals from the final judgment in this consolidated
matter. Chi-Li and Hou’s estate have separate counsel and have
filed separate respondent’s briefs concerning the two proceedings.
As to the Nogales property, we affirm the order of summary
adjudication brought by Chi-Li. As to the Gale property, we
reverse the order granting judgment in favor of Hou’s estate on
the ground that BBRC was deprived of its due process right to a
fair hearing.
FACTUAL BACKGROUND
Formation of BBRC
Decedent Hou was the founder of BBRC, which was formed
in 1998 as a religious nonprofit organization. BBRC is a tax
exempt 501(c)(3) corporation focused on teaching the Buddhist
faith.2
At BBRC’s inception Hou identified himself as the sole
director of BBRC’s board of directors. BBRC alleged that other
members acted as directors of BBRC during the relevant time
period. Linda Sue Webb testified that between 2008 and 2011,
there were five directors on the board of BBRC: herself, Rommie
Fred Webb, Kuei Ching Chen Liu (Chen), Jing-Shin Chi, and Lisa
Ober. Tsai Lien Liao (Liao), a Buddhist nun and current CEO of
BBRC, testified that between 2008 and 2016 there were five
2 Pursuant to title 26 United States Code section 501(c)(3),
corporations organized and operated exclusively for religious
purposes are exempt from taxation subject to certain restrictions.
3
directors on BBRC’s board: Hou, Jing-Shin Chi, Linda Sue Webb,
Rommie Fred Webb and Eva Tsai.3
Hou died on May 17, 2014. Shortly thereafter Liao called a
meeting at which she was appointed CEO of BBRC. The
transactions at issue in this lawsuit took place while Hou was
alive and acting CEO of BBRC.
The Nogales Property
Hou obtained title only in his name as a single man and
sole grantee on May 19, 2006, by way of grant deed from Hsiu
Chin Tseng. The deed was recorded in the Los Angeles County
Recorder’s Office on December 22, 2006. The face of the grant
deed provides: “This is a bona fide gift and the grantor received
nothing in return, R&T 11911.”4
On November 13, 2008, Hou executed a grant deed
transferring the Nogales property to BBRC, which was recorded a
few days later in the Los Angeles County Recorder’s Office
(November 2008 deed). A promissory note was executed the same
day by Hou acting on behalf of BBRC, in favor of himself,
obligating BBRC to pay him $250,000 on or before December 31,
2009, with interest of 6 percent per annum. The note granted
Hou a security interest in the Nogales property in the event
BBRC failed to pay the note (Nogales note). The Nogales note
further provided that BBRC “waives presentment for payment,
3 Hou’s estate argues that there was insufficient
evidence at trial that these individuals were directors because
there was no documentary evidence, and no foundation for
BBRC’s claim that these individuals were elected as directors.
4 The parties agree that Hou donated the property adjacent
to the Nogales property (4111 S. Nogales), to BBRC by grant deed
on June 4, 2008.
4
notice of non-payment, protest and notice of protest.” The note
also stated that if BBRC was unable to “get the loan from the
Bank within 10 months from today for whatever reason,” it would
have to transfer the property back to Hou within 90 days.
There was no evidence that BBRC obtained a loan or made
any payments on the note to Hou. On February 2, 2010, BBRC
deeded the Nogales property back to Hou. The deed indicated,
“no consideration name change.” The transfer tax was listed as
$0, and the document indicated “[t]he grantors and the grantees
in this conveyance are comprised of the same parties who
continue to hold the same proportionate interest in the property,
R & T 11923(d).”
BBRC never listed the Nogales property as an asset in any
of its tax returns, including the returns reviewed and signed by
Liao, as the purported present CEO of BBRC. However, Hou
specifically identified the Nogales property as his property for
which he reported personal rental income or loss on his tax
returns.
On December 2, 2011, Hou transferred the Nogales
property to his daughter Chi-Li, by way of grant deed, which was
recorded with the Los Angeles County Recorder on December 8,
2011. The grant deed provides, “This is a bonafide gift and the
grantor received nothing in return, R & T 11911.”
A fraudulent power of attorney purporting to grant Jing
Shin Chi the power of attorney-in-fact from Chi-Li, was dated in
January 2014 (POA). In February 2014, Jing Shin Chi purported
to execute a deed on behalf of Chi-Li, as attorney-in-fact for Chi-
Li, transferring the Nogales property from Chi-Li back to Hou.
Chi-Li did not learn of the forged January 2014 POA or the
February 2014 deed until the commencement of this action. Chi-
5
Li never executed or approved the documents. Discovery
revealed the commission of notary fraud and forgery of both
documents. None of the facts regarding the fraud were disputed
by BBRC.
The Gale Property
Prior to November 2008, Hou owned the Gale property.5
On November 8, 2008, Hou transferred the Gale property to
BBRC via grant deed in a transaction similar to that involving
the Nogales property. Lai testified that Hou’s intention was for
BBRC to receive a loan, so in November 2008 he transferred title
of several properties to BBRC so that BBRC could obtain
approval for the loan. In exchange for title to the property BBRC
provided a promissory note payable to Hou in the amount of
$1.16 million with interest at 6 percent per year (Gale note). As
with the Nogales note, pursuant to the Gale note BBRC waived
all presentment for payment, notice of non-payment, protest and
notice of protest. The note provided Hou a security interest in
the Gale property and if BBRC was unable to obtain “the loan
from the Bank within 8 months for whatever reason, [BBRC]
must transfer the property back to [Hou] within 60 [days].”
When BBRC did not obtain a loan, BBRC transferred the
5 Linda Sue Webb testified that she was a director of BBRC,
that she loaned Hou $800,000 in 2008 to buy the Gale property,
and that Hou told her he was buying it for BBRC. Webb testified
on cross-examination that she had reached a settlement
agreement with BBRC providing that she would receive 60
percent of the proceeds of the Gale property. She had a lawsuit
pending against Hou’s estate for money she loaned to Hou, but it
did not include the money she loaned in connection with the Gale
property. Hou never told her that he needed to use the Gale
property as collateral for a loan.
6
property back to Hou by grant deed dated February 2, 2010. The
grant deed from BBRC to Hou contained language identical to
that found in the Nogales deed concerning the Nogales property:
“The grantors and the grantees in this conveyance are comprised
of the same parties who continue to hold the same proportionate
interest in the property, R & T 11923(d).”
BBRC’s accountant, Tina Chiang, C.P.A. (Chiang),
prepared BBRC’s taxes between 2007 and 2010, and testified that
BBRC had money and assets in 2008 such that it would not need
a loan. Chiang also testified that she had never seen the Gale
note; and if Hou had made her aware of the note, she would have
referenced it as a liability on the 2008 tax return. Since Chiang
had not seen the note, it was not referenced as a liability in the
BBRC 2008 tax return.
PROCEDURAL HISTORY
BBRC’s complaint and the Hou estate’s cross-complaint
On June 13, 2014, BBRC filed a complaint in Los Angeles
County Superior Court seeking to quiet title to the Nogales
property and the Gale property, among others. BBRC alleged
that it held title to the properties until February 2, 2010, the date
on which Hou allegedly secretly transferred the properties back
to himself. BBRC alleged that the transfers were carried out
with fraudulent intent to deprive BBRC of its interest in the
properties.
Lai, as administrator of the Hou estate, answered on behalf
of the Hou estate on August 24, 2016. As administrator, Lai
cross-complained against BBRC and others for quiet title to the
Gale property.
7
Chi-Li’s complaint and BBRC’s cross-complaint
On July 15, 2014, Chi-Li filed a complaint to quiet title to
the Nogales property, alleging that Jing-Shin Chi wrongfully
transferred the property and that she was not the attorney-in-
fact for Chi-Li. Chi-Li alleged that the property should revert
back to her. BBRC and Hou’s estate were defendants in the
action. BBRC filed a cross-complaint in the action. Initially,
BBRC included allegations of misconduct against Chi-Li.
However, following proceedings on Chi-Li’s demurrer, BBRC
removed all allegations of misconduct against Chi-Li and the sole
remaining cause of action in BBRC’s cross-complaint against Chi-
Li was its competing claim for quiet title to the Nogales property.
Consolidation
BBRC filed a motion to consolidate the two actions, which
the trial court did on November 5, 2015.
Chi-Li’s summary adjudication motion regarding the
Nogales property
On July 15, 2016, Chi-Li filed a motion for summary
adjudication (MSA), seeking two orders: (1) that she holds valid,
sole and legal title to the Nogales property; and (2) an order
voiding the grant deed of February 21, 2014 and power of
attorney dated January 10, 2014. BBRC did not challenge the
portion of Chi-Li’s motion related to voiding the fraudulent power
of attorney and related wrongful and void transfer of title.
The motion was initially scheduled to be heard on
September 14, 2016, but was continued several times. Due to
Chi-Li’s failure to attend a scheduled deposition, the trial court
provided a final continuance so that Chi-Li could fly from Taiwan
to Los Angeles to attend the deposition. In so doing, the court
noted that BBRC had ample notice of the MSA and could have
8
noticed Chi-Li’s deposition within the previous two years. The
court agreed to accept rough copies of the deposition transcript of
Chi-Li.
The hearing on Chi-Li’s MSA was held on December 30,
2016. The trial court provided a tentative ruling granting Chi-
Li’s MSA and quieting title to the Nogales property in favor of
Chi-Li.
In the ruling, the trial court noted that it had taken judicial
notice of “documents recorded against, or with respect to, the
[Nogales] [p]roperty; documents comprising part of the court
record in civil actions filed in the superior courts of this state; the
tax returns of [d]ecedent and BBRC; and BBRC’s statement of
information filed with the California Secretary of State.” The
court found that Chi-Li provided documentary evidence
establishing the chain of title and that she carried her legal
burden to show that she held valid legal title to the Nogales
property. In addition to the documents establishing chain of title,
Chi-Li provided other documentary evidence supporting her
position, including BBRC’s tax returns and the decedent’s
personal tax returns. BBRC failed to raise a triable issue of
material fact with respect to this issue.
BBRC submitted on the tentative without asserting any
legal objections, evidentiary objections, or arguments. The
tentative ruling became final. BBRC filed a motion for new trial,
which was denied.
Bench trial concerning the Gale property
The bench trial on the Gale property commenced on
November 6, 2017. The only parties to attend trial were BBRC
and Lai, as administrator of the estate of Hou. On the first day of
trial, BBRC and Lai were sent to meet and reach stipulations as
9
to exhibits and to provide the court with a time estimate. BBRC’s
counsel estimated 16 hours for his case. The court responded, “I
don’t have 16 hours to give you. To tell you up front, I’m not
doing that. I’m not giving you 16 hours. I’m just not. Okay?”
The court later stated it would give each side five hours, “and you
[can] allocate it however you want.” BBRC’s counsel advised that
he would need at least 10 hours, because the matter involved
property valued at more than $2 million and his witnesses
needed translators.6 The court required counsel to make an offer
of proof to exceed the allotted five hours of trial time. Counsel
began to make an offer of proof, but the court did not permit its
completion. Despite counsel’s protests, the court did not budge
from its five-hour time limit.
BBRC’s counsel objected on the record to the court’s five-
hour time limit, stating, “with all due respect, we respectfully
object that we do need more than five hours because of our—”
The court interrupted, stating: “I’m not just accepting your
representation, so the answer to that is no. I’d ask you guys to
meet and confer and see what you come up in terms of
streamlining it. And if you can’t do that—” BBRC’s counsel
responded, “We did streamline. But counsel and I agree that we
need at least—” The court then repeated that it needed an offer
of proof. Counsel attempted to make such an offer, stating: “I
understand. We reduced our trial witnesses to five witnesses,
and two—all our five witnesses, two of them are parties. And the
offer of proof is—” The court then advised that the offer of proof
needed to be in writing. Counsel for BBRC inquired, “Your
6 The trial initially also involved a property the parties
referred to as the Foxglove property, but the Foxglove property is
not at issue in this appeal.
10
Honor, can I at least give you an offer of proof, so maybe—at least
give me seven, eight hours of time so maybe I can allocate—” The
court interrupted counsel, but suggested that the matter would
be reviewed again after the break. Counsel was advised to begin
his case.
Following his opening statement, counsel for BBRC asked
the court if it would consider extending the five-hour time
allotment due to counsel’s inexperience. The court responded
that it would not.
Counsel for BBRC called defendant Lai as his first witness.
Next counsel called Chiang, the CPA who prepared taxes for
BBRC between 2007 and 2010. Counsel then called Chen, who
needed an interpreter. Lai’s counsel objected to the witness
stating that the witness was never identified in discovery. The
court allowed the testimony subject to a motion to strike. Chen
testified that she had been on the board of BBRC and secretary of
BBRC since 1999. On the motion of Lai’s counsel, Chen’s
testimony was stricken on the ground that her name had never
been provided and no corporate documents had been produced.
The first day of trial ended, and the court advised counsel that
BBRC had two and a half hours of trial time remaining.
On the second day of trial, BBRC called Linda Sue Webb,
who needed an interpreter. Webb testified that she had been a
director of BBRC since about 2000 and that from 2008 to 2011
there were four other members of the board. She further testified
that she loaned $800,000 to Hou in 2008 to buy the Gale property
and that he told her he was buying it for BBRC. Webb testified
on cross-examination that she reached a settlement agreement
with BBRC that she would receive 60 percent of the proceeds of
the sale of the Gale and Foxglove properties. After Webb’s
11
testimony, the court advised BBRC’s attorney that he had one
hour and 20 minutes remaining and informed him that he had to
“figure out how you want to allocate it. If you want to reserve
some time for rebuttal, you need to do so.” Counsel advised the
court that he desired to have 30 minutes for rebuttal.
BBRC’s last witness was Liao, who testified through an
interpreter, that she was CEO of BBRC by way of an “urgent
meeting.” Due to the time taken by Liao’s testimony, counsel was
not able to finish questioning Liao.
When counsel hit the four-hour, 30-minute mark, he was
given a choice: use his last 30 minutes to call another witness or
abandon testimony and reserve the remaining time for rebuttal.
Counsel elected the latter.
Estate of Hou’s motion for judgment
Prior to presenting the estate’s case in defense, the estate
made a motion for judgment. The court inquired, “A motion for
directed verdict?” The estate’s counsel responded, “Well, a
directed verdict is in a jury case, but under 581c in a court trial.”7
After entertaining argument from both sides following the
estate’s motion, the court indicated:
“I’m prepared to enforce the title presumption unless
you—the problem is, if it was just more likely than
not, you might be there; but this is not clear and
convincing. And, therefore, I would respect the title
presumptions of 622 of the Evidence Code, and I will
find you haven’t presented clear and convincing
7 The estate’s counsel argues on appeal that the motion was
not made under Code of Civil Procedure section 581c. The estate
acknowledges that counsel may have cited the wrong statute at
trial, but argues that the motion was for judgment under Code of
Civil Procedure section 631.8 and was evaluated as such.
12
evidence to rebut the title presumption. So that’s
where I am (inaudible)—that would be the court’s
ruling.”
Judgment
On March 29, 2019, the court entered its judgment after
motion for summary adjudication and trial. The judgment
quieted title in the Nogales property in favor of Chi-Li, and
quieted title to the Gale property in the estate of Hou.
On April 25, 2019, BBRC filed its notice of appeal from the
judgment.
DISCUSSION
I. MSA as to the Nogales Property
BBRC argues that the trial court erred in granting
summary adjudication in favor of Chi-Li as to the Nogales
property. First, BBRC argues that the trial court improperly
applied the clear and convincing evidence standard from
Evidence Code section 662 on the motion for summary
adjudication. BBRC argues that its challenges to legal title were
based on fraud, thus the clear and convincing standard was not
appropriate. (Citing People v. Semaan (2007) 42 Cal.4th 79, 88.)
Because it was a summary adjudication motion, BBRC argues,
the standard was whether reasonable inferences established a
triable issue of fact. BBRC argues that the evidence before the
court provided a reasonable inference that Hou committed a
wrongful, self-dealing transaction. Further, BBRC argues that
the trial court should have applied Corporations Code section
9243 to void the self-dealing transaction carried out by Hou.
A. Standard of review
We review an order granting summary adjudication de
novo. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826,
13
860.) We must independently examine the record to determine
whether a triable issue of fact exists. (Saelzler v. Advanced
Group 400 (2001) 25 Cal.4th 763, 767.) The trial court’s stated
reasons for its decision granting summary adjudication are not
binding, as we review the court’s ruling, not its rationale.
(Carnes v. Superior Court (2005) 126 Cal.App.4th 688, 694.) In
determining whether a triable issue was raised, we must
disregard any evidence that the trial court properly excluded and
must consider any evidence to which no objection, or an unsound
objection, was made. (McCaskey v. California State Automobile
Assn. (2010) 189 Cal.App.4th 947, 957.) We must consider all
admitted evidence in the light most favorable to the party
opposing the summary adjudication motion. (Collin v.
CalPortland Co. (2014) 228 Cal.App.4th 582, 588.)
Our role is to determine “‘“whether issues of fact exist,”’”
not to decide the merits of the issues themselves. (Wright v.
Stang Manufacturing Co. (1997) 54 Cal.App.4th 1218, 1228.)
B. The trial court’s ruling on Chi-Li’s MSA
Chi-Li sought summary adjudication on her first and third
causes of action for quiet title and declaratory relief, seeking an
order that she holds valid, sole legal title to the Nogales property.
In deciding the motion, the trial court granted Chi-Li’s request
for judicial notice of “documents recorded against, or with respect
to, the [Nogales] [p]roperty; documents comprising part of the
court record in civil actions filed in the superior courts of this
state; the tax returns of [d]ecedent and BBRC; and BBRC’s
statement of information filed with the Secretary of State.”
To support the motion, Chi-Li submitted the recorded deed
documents evidencing the chain of title. The documents showed
the decedent’s acquisition of the Nogales property, the
14
November 2008 grant deed conveying title to BBRC in connection
with the loan transaction; the promissory note executed on the
same day; and the February 2010 deed back to the decedent from
BBRC. On December 2, 2011, the decedent executed a grant deed
transferring the property to Chi-Li. Chi-Li carried her burden to
show that she held record title to the property by virtue of the
December 2, 2011 grant deed executed by her father.
The trial court found that the December 2, 2011 deed
constituted prima facie evidence that the property was conveyed
by decedent to Chi-Li. Pursuant to Evidence Code section 662,
the trial court found that Chi-Li is therefore presumed to be the
full beneficial owner of the property, a presumption which may be
rebutted only by clear and convincing proof. In addition to the
December 2011 grant deed, other documents supported Chi-Li’s
position that she was the rightful owner of the Nogales property.
For example, BBRC’s tax returns for 2008 through 2010 did not
show any loan payments to decedent. Additionally, BBRC did not
list the Nogales property on its tax returns. Accordingly, the
burden shifted to BBRC to show a triable issue of material fact as
to whether Chi-Li held beneficial title.
The trial court found that BBRC failed to carry its burden
of showing a triable issue of material fact. Although BBRC
challenged Chi-Li’s title on various grounds, it did not present
evidence to support its contentions. BBRC argued that the
February 2010 grant from BBRC to decedent was fraudulent or
may have resulted from a breach of fiduciary duty on the part of
the decedent towards BBRC. However, BBRC presented no
evidence to support this theory. Similarly, BBRC challenged Chi-
Li’s title on the ground that she paid no consideration for the
title. However, the December 2011 grant deed expressly stated
15
that the transfer was a gift. BBRC presented no evidence to
undermine the close familial relationship between the grantor
and grantee. Finally, BBRC argued that Chi-Li was a
“strawman” and decedent did not intend to permanently transfer
the property to her. The trial court noted that this argument was
“moot” due to the fact that the probate court approved a
settlement agreement confirming that the Nogales property
belonged to Chi-Li. In addition, BBRC filed a creditor’s claim in
the probate proceedings, which could be understood as a tacit
admission that BBRC does not have a valid claim to title. The
trial court noted that while BBRC’s theories had changed, it did
not present evidence supporting its contentions or raise a triable
issue as to the validity of the December 2, 2011 grant deed.
C. The clear and convincing standard
Evidence Code section 662 provides that “[t]he owner of the
legal title to property is presumed to be the owner of the full
beneficial title. This presumption may be rebutted only by clear
and convincing proof.” Evidence Code section 662 is applicable
where there is no dispute as to legal title, but there is a question
as to equitable title. (Murray v. Murray (1994) 26 Cal.App.4th
1062, 1067-1068 (Murray); see Toney v. Nolder (1985) 173
Cal.App.3d 791, 793; Tannehill v. Finch (1986) 188 Cal.App.3d
224, 227-228.) Throughout these proceedings, BBRC has
consistently argued that it held equitable rights to the property,
not legal title.
As the Supreme Court has explained, Evidence Code
section 662 serves to codify the common law rule that “oral trusts
in derogation of title are disfavored and must be proved by clear
and convincing evidence.” (People v. Semaan, supra, 42 Cal.4th
at p. 88.) “‘Allegations that deeds absolute are actually
16
mortgages, that conveyances are subject to a trust, and that legal
title does not represent beneficial ownership have . . . been
historically disfavored because society and the courts have a
reluctance to tamper with duly executed instruments and
documents of legal title.’” (Ibid.) The high court clarified that
Evidence Code section 662 does not apply “when title itself is
challenged as not genuine.” (Semaan, at p. 88.) Otherwise, the
section would “encourage fraud by permitting a dishonest person,
simply by creating false documents of title, to shift to an innocent
owner the burden of proving ownership by clear and convincing
evidence.” (Id. at p. 89.)
BBRC argues that Evidence Code section 662 does not
apply in this matter. In support of this argument, BBRC cites
Murray, supra, 26 Cal.App.4th 1062. In Murray, the plaintiff
claimed the title was void. She claimed that her signature on the
deed transferring the property to her stepfather’s new wife had
been forged. (Id. at p. 1064.) Under those circumstances, the
trial court did not err in instructing the jury that the plaintiff had
to prove her case by a preponderance of the evidence. (Id. at
p. 1068.) The presumption found in Evidence Code section 662
did not apply because the plaintiff was asserting that the forged
title was void, not that she had a beneficial interest in the
property. (Murray, at pp. 1067-1068.) In other words, the
Murray plaintiff was challenging legal title, not claiming
equitable rights to title.
Here, in contrast to the situation in Murray, BBRC is not
claiming that Hou or Chi-Li created false or fraudulent
documents. Instead, BBRC’s various theories were grounded in
equity. For example, in its June 13, 2014 complaint, which
sought, in part, to quiet title to the Nogales property, BBRC
17
alleged only that it “holds equitable ownership interests in the
property.” While BBRC alleged that Hou engaged in “‘self-
dealing’” and acted with “fraudulent intent” in transferring the
Nogales property back to himself and then to Chi-Li, it did not
argue that the documents themselves were false or fraudulent.
BBRC included a cause of action for unjust enrichment and
sought monetary damages based on its purported interest in the
various properties, including the Nogales property. BBRC did
not pray for an order striking or voiding the grant deeds at issue.
In its first amended cross-complaint, filed November 13, 2015,
BBRC alleges that the transfers of the deeds were done “with
fraudulent intent to defraud BBRC.” As a result, BBRC alleged
that it held “equitable ownership interests” in the property.
BBRC sought damages, imposition of a constructive trust, and
restitution of funds. Again, BBRC did not seek to strike or void
the grant deeds at issue. Thus, the presumption found in
Evidence Code section 662 was applicable to Chi-Li’s title.
Further, even if BBRC did allege that title to the Nogales
property was void, the trial court’s reference to the clear and
convincing standard would constitute harmless error under the
circumstances. BBRC’s claims to the Nogales property were
determined on a motion for summary adjudication. As such, the
court was not imposing a standard of proof but seeking to
determine whether BBRC had presented any evidence that
established a triable issue of fact. While the court noted that
Chi-Li’s ownership to the legal title of the property created a
presumption that she is also the owner of full beneficial title and
that such presumption “may be rebutted only b[y] clear and
convincing proof,” the trial court did not rely on that standard in
deciding the motion. Instead, the trial court found that BBRC
18
failed to present any evidence at all to support its various
theories. For example, the trial court stated, “BBRC does not
present any evidence of fraud or other tortious conduct to rebut
the presumption or raise a triable issue of material fact.” In
addition, the trial court pointed out that BBRC did not present
evidence to dispute Chi-Li’s position that the property was a gift
to her.8 Further, in spite of its various theories, BBRC did not
“present evidence to support [its] contentions or raise a triable
issue about the validity of the December 2, 2011 grant deed.”9
8 BBRC asserts on appeal that there was an inference that
the transfer was not a gift and that, in fact, Chi-Li provided
financial and personal support to her father in exchange for the
property. BBRC asserts that this contradiction creates a triable
issue as to whether the transaction was legitimate. As BBRC
sets forth no legal authority for this argument, we find it
unpersuasive. That a daughter would provide financial and
personal support to her father, and a father would gift his
daughter a property, does not necessarily raise any question of
impropriety.
9 BBRC asserts on appeal that the settlement agreement
approved by the probate court did not confirm that the Nogales
property belonged to Chi-Li and merely acknowledged that BBRC
was asserting claims to the property. This statement appears to
be incorrect based on the language of the settlement agreement,
which was before the trial court in connection with the MSA:
“The Parties acknowledge, confirm, and agree that Chi Li Hou is
the rightful sole owner and holder of fee simple title to the real
properties commonly known as the [Nogales property . . . ]. The
Chi Li Properties do not belong to and are not part of the Estate.”
While the settlement agreement acknowledged that BBRC was
asserting claims to the Chi Li properties, it also acknowledged
and confirmed “Chi Li Hou’s rights, title, and interest to [the
19
Under the circumstances, it is irrelevant whether the trial
court should have imposed a clear and convincing evidence, or a
preponderance of the evidence, standard. BBRC presented no
evidence in support of its theories and did not create a triable
issue of fact as to its alleged interest in the title of the Nogales
property.
D. Corporations Code section 9243
BBRC cites Corporations Code section 9243, which
describes a “self-dealing transaction” as “a transaction to which
the corporation is a party and in which one or more of its
directors has a material financial interest” and which does not
meet the requirements of certain subsections of the statute. The
statute provides several factual scenarios under which a
transaction is excluded from being described as a self-dealing
transaction and also provides numerous factual scenarios under
which the statutory remedies are not available. BBRC argues
that this provision of the Corporations Code provides BBRC with
the right to obtain a court order of void title as to the Nogales
property.
BBRC fails to provide a citation to the record showing that
it raised this statute or this argument below. In reviewing a
summary adjudication motion, appellate courts will generally not
consider an argument raised in the appeal if it was not raised in
the trial court. (Noe v. Superior Court (2015) 237 Cal.App.4th
316, 335.) Because the statute was not raised below, BBRC failed
Nogales property] in any action, claim, or proceeding brought
currently or [that] may be brought in the future by Liao, BBRC,
Chi Li Hou or any other parties.” The language of the settlement
agreement does not leave room for BBRC to argue that the trial
court misinterpreted this document.
20
to set forth the specific application of the statute under the
factual circumstances of this case. As set forth above, the statute
is complex and contains various provisions under which a
transaction would not qualify as “self-dealing,” and other
provisions which specify that a remedy shall not be granted
under certain circumstances. As Chi-Li points out, the language
of subdivisions (b) and (d) of Corporations Code section 9243
provide multiple scenarios where a person may hold interest on
both sides of a transaction. These precise facts were never
developed below, and we decline to consider the application of the
relevant facts of the Nogales transactions to Corporations Code
section 9243 in the first instance on appeal. (Cable Connection,
Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1350, fn. 12 [“‘A
party is not permitted to change his position and adopt a new and
different theory on appeal. To permit him to do so would not only
be unfair to the trial court, but manifestly unjust to the opposing
litigant.’”].)
BBRC has thus forfeited its argument regarding
Corporations Code section 9243 by failing to raise it below.
Further, BBRC provides no authority or reasoned argument
suggesting that the various transfers of title to the Nogales
property were in violation of Corporations Code section 9243.
Therefore, we decline to address this issue further. (Hernandez v.
First Student, Inc. (2019) 37 Cal.App.5th 270, 277 [“‘“When an
appellant raises an issue ‘but fails to support it with reasoned
argument and citations to authority, we treat the point as
waived.”’”].)
21
E. Conclusion
The trial court’s decision granting summary adjudication in
favor of Chi-Li as to the Nogales property is affirmed.10
II. The Gale property
BBRC appeals from the grant of nonsuit under Code of
Civil Procedure section 581c, or motion for judgment under Code
of Civil Procedure section 631.8, in the trial of the Gale property
on several grounds. First, BBRC argues that it was denied due
process of law because the trial court placed an arbitrary five-
hour limit on its trial time. In addition, BBRC argues that even
considering the limited evidence that it was permitted to present,
the trial court erred in granting the estate’s motion for judgment.
BBRC argues that the evidence demonstrated multiple wrongful
transactions, that the trial court erred in applying the clear and
convincing standard of evidence, and that the court failed to
properly consider Corporations Code section 9243.
10 Chi-Li has requested that we take judicial notice of the
records of the San Bernardino case: Buta Buddhism Research
Center v. Chi (Super. Ct. San Bernardino County, 2018, No.
CIVDS1409754) (San Bernardino case). Chi-Li argues that her
motion for summary adjudication should be affirmed on the
ground of collateral estoppel due to identical litigation involving
BBRC and Chi-Li pertaining to the property at issue in the San
Bernardino case. Chi-Li argues that the judicial determination
in the related San Bernardino case on similar facts and law
applies to bar BBRC’s case against Chi-Li in this matter.
Because we have determined that the summary adjudication in
this matter should be affirmed based on the record before the
trial court, we decline to reach the issue of whether collateral
estoppel applies under the circumstances. We therefore deny
Chi-Li’s request for judicial notice.
22
We conclude that BBRC was denied its due process right to
a fair hearing, and will reverse the matter involving the Gale
property for a new trial. Therefore, we need not reach the merits
of BBRC’s other claims on appeal.
A. Due process principles
The 14th Amendment to the United States Constitution
provides that no state may deprive a person of life, liberty, or
property without due process of law. (U.S. Const., 14th
Amend.)11 “‘The term “due process of law” asserts a fundamental
principle of justice which is not subject to any precise definition
but deals essentially with the denial of fundamental fairness,
shocking to the universal sense of justice.’” (In re Marriage of
Carlsson (2008) 163 Cal.App.4th 281, 290 (Carlsson).) “‘“The trial
of a case should not only be fair in fact, but it should also appear
to be fair.” [Citations.] A prime corollary of the foregoing rule is
that “A trial judge should not prejudge the issues but should keep
an open mind until all the evidence is presented to him.”’” (Id. at
pp. 290-291.)
The trial court has the power to “rule on the admissibility
of evidence, exclude proffered evidence that is deemed to be
irrelevant, prejudicial or cumulative and expedite proceedings
which, in the court’s view, are dragging on too long without
significantly aiding the trier of fact.” (Carlsson, supra, 163
Cal.App.4th at p. 291.) However, a trial court may not
summarily terminate a trial before a party has finished giving its
presentation. (Ibid.) “‘Denying a party the right to testify or to
offer evidence is reversible per se.’” (Ibid.) A trial court’s efforts
11 The California Constitution similarly provides that persons
may not be deprived of life, liberty, or property without due
process of law. (Cal. Const., art. 1, § 15.)
23
to expedite the handling of matters before him “‘“should never be
directed in such manner as to prevent a full and fair opportunity
to the parties to present all competent, relevant, and material
evidence bearing upon any issue properly presented for
determination.”’” (Ibid.) A trial court may not run a trial “on a
stopwatch, curtailing the parties’ right to present evidence on all
material disputed issues.” (Id. at p. 292.)
B. BBRC was deprived of its due process right to
present evidence
The trial court in this matter improperly conducted the
trial on a stopwatch and curtailed BBRC’s opportunity to present
evidence.
From the beginning, the trial court showed impatience with
BBRC’s counsel, refusing to consider BBRC’s request for 16 hours
of trial time. The court began by asking the parties to give an
estimate of time needed for trial, “because I’ve got not one, but
three trials waiting for available time.” BBRC’s counsel,
explained to the trial court, “the plaintiff has a heavy burden so
we at least need 16 hours.” The trial court responded, “I don’t
have 16 hours to give you. To tell you up front, I’m not doing
that. I’m not giving you 16 hours. I’m just not. Okay?”
The court offered, “. . . I’m just going to give you each five
hours, and you allocate it however you want. That’s what I’m
going to do—I see you shaking your head, but that’s what I’m
going to do.” When the court again stated its position that the
trial could be “resolved in ten hours or less,” counsel explained,
“Your Honor, the reason why I need more time is because my
witness—especially my witnesses also need interpreter, and I
have interpreter stand by you.”
24
The court insisted that counsel give an offer of proof as to
what his witnesses would say. When he attempted to do so, the
court interrupted him:
“Mr. Hsu: My offer of proof is we have is [sic]
C.P.A. to testify to the 2008 tax return to show that
there’s a fraudulent conveyance because at that time
even though there is a—
“The court: No, he can give an opinion.
C.P.A.’s can give an opinion in about an hour—
“Mr. Hsu: It’s not opinion. The C.P.A. is the
custodian of the records. She’s going to have to
testify that throughout her examination of the
document based on 2008 tax return. And she—
“The court: You have to do a full offer of proof
on that then. Okay?
“Mr. Hsu: Yes. So it’s going to take more time.
It’s not just going to—
“The court: I’m not certain of that. I don’t
agree with you on that. Okay? If the offer is, the
C.P.A. is going to opine to, what, cash flow?
“Mr. Hsu: Not the cash flow—
“The court: Or opine for what?
“Mr. Hsu: It’s basically the tax return itself.
The officer has never borrowed the money
indicating—
“The court: Are they going to do a forensic
accounting?
“Mr. Hsu: Not a forensic accounting. It’s a
check on the checkbox.
“The court: What’s their opinion going to
consist of that is going to take more than an hour—
25
“Mr. Hsu: Their opinion basically is going to be
showing that the tax return is they will never show
that the corporation, BBRC, borrowed any money
from the decedent.
“The court: All right. Right now you got five
hours, so you just need to think about that. We’ll see
if you need more time, but that’s where I am. Okay?
“Mr. Hsu: Okay.”
The court proceeded to denigrate and interrupt counsel for
BBRC when he chose to begin his case with his opponent’s
witness, stating:
“The court: You’re going to start with 776?[12]
“Mr. Hsu: Yes, Your Honor.
“The court: What’s the offer of proof on 776?
“Mr. Hsu: Let me go over the . . .
“The court: I love that lawyers always like to
start with cross-examination. I mean, it can work for
a judge, but I’m always clueless as to why we always
start with the other side’s lawyer—side, as if that’s
going to prove their case. To me, that’s usually a bad
sign. Your case should stand on its own merit,
independent of calling the other side to cross-
examination.
“Mr. Hsu: Yes. But because—
“The court: Just my observation.
12 The court was referring to Evidence Code section 776,
which permits a party to the record of any civil action to be called
“and examined as if under cross-examination by any adverse
party at any time during the presentation of evidence by the
party calling the witness.”
26
“Mr. Hsu: —the question originate with the
decedent’s—
“The court: We’ll see. To me, it’s like that
tactic, from what I see, is if the plaintiff starts the
case by cross-examining the other side, usually
results in a lot of waste of time. You have to prove
your case independent of the other side, typically. All
right?
“Mr. Hsu: Okay.
“The court: All right. But we can do it however
you wish, but I’m just—I want us to be efficient.
We’re in a point now—with these trials and these
cases, we have to be efficient.”
Shortly thereafter, Mr. Hsu tried again to secure more than
five hours to present his case. He stated, “Your Honor, with all
due respect, we respectfully object that we do need more than five
hours because of our—” The court interrupted, stating: “I need an
offer of proof. I’m not just accepting your representation, so the
answer to that is no. I’d ask you guys to meet and confer and see
what you come up in terms of streamlining it. And if you can’t do
that—” Mr. Hsu stated, “We did streamline. But counsel and I
agree that we need at least—” The court again insisted on an
offer of proof, but simultaneously refused to budge from its five-
hour time allotment:
“The court: Then you’re going to have to make an
offer of proof as to why. I mean, otherwise, I’m just
going to start in with the openings. Tell me what you
have to prove. I’m giving you five hours each. And
depending upon where we are, I may extend it; I
don’t know, but that’s where I am. Okay? Because I
don’t want duplication. I do not want duplication.”
27
Mr. Hsu expressed his understanding and stated that he
had “reduced [his] trial witnesses to five witnesses.” He added,
“And the offer of proof is—” and was again interrupted by the
court before he could make his offer. The court, for the first time,
insisted that the offer of proof be in writing.
The estate’s counsel indicated that he needed only two to
three hours, to which the court responded, “Right. Yes. You’ve
got five hours.” The court then stated, “That’s all I can give you.”
Counsel asked again, “Your Honor, can I at least give you
an offer of proof, so maybe—at least give me seven, eight hours of
time so maybe I can allocate—” The court interrupted, “Why
don’t you do this? Start with your opening. I’ll give you 30
minutes to give me your opening, tell me what you’re going to
prove, and I’ll revisit this at 1:30.”
After opening statement, the court stated, “All right. It
does appear to me that that can be done in five hours each. I
can’t imagine, given the documents and the remedy that you’re
seeking, that this is going to take three or four days.” Counsel
again asked for more time, stating, “Your Honor, can offer maybe
perhaps experience of counsel maybe a thing to consider to
increase the time for plaintiff?” The court responded: “No. I’m
not trying to be mean—”
The court concluded, “Based on your opening, I think this
appears to be straightforward, and based on the exhibits, this is
more document-related. So you’ll have two and a half hours this
afternoon to present your case and two and a half hours
tomorrow.”
As counsel began his case-in-chief, the court stated,
“Mr. Hsu, do you want to begin? Call your first witness, and
you’ll have a total of five hours starting now.”
28
The court continued to run the trial on a stopwatch,
warning counsel of his time limits frequently. The court formally
stopped the clock for breaks, and indicated how much time was
left. When counsel asked to have a moment to confer with his
client, the court stated, “Your time is running. Go ahead.”
As counsel neared the end of his five hours, the court
inquired, “Are you going to reserve any time for rebuttal?
Because you do have a total time of five hours, and right now
you’re at three hours and 45 minutes.” Mr. Hsu indicated that he
would like to reserve 30 minutes for rebuttal.
Counsel for Hou’s estate indicated that he did not need his
full five hours of allotted time. There was no discussion of
allowing more time for BBRC’s counsel despite the brief defense
case.
The court warned counsel when he had 35 minutes left in
his case, stating: “You’ve got about 35 minutes left in your case in
chief including rebuttal. I would suggest you use it wisely,
Mr. Hsu.” Counsel immediately rested his case, reserving 30
minutes for rebuttal. BBRC asserts that Mr. Hsu was not able to
finish his direct examination of his last witness.
Hou’s estate’s counsel then made a motion for judgment,
which the trial court granted on the ground that BBRC failed to
meet its burden of proof, particularly given the presumption
under Evidence Code section 662. The court stated:
“I mean, so without more, there’s smoke, but I don’t
see flames or anything hot. So, I mean, you’ve got to
have a little bit more than the smoke in this
circumstance because of the presumption. If you
didn’t have the title presumption, I think you’d be
getting there. But with the title presumption, I don’t
think it’s clear, and it certainly isn’t convincing to
me.”
29
The court continued:
“. . . I think the reason—there is a reason why you
have to have more evidence than just, ‘Hey, judge, it’s
circumstantial’—because you’re really presenting
indirect evidence that I draw a circumstantial
conclusion. And my reaction is BBRC would have to
produce minutes, documents, a loan agreement,
escrow instructions, that would get me there. And in
the absence of that, you just haven’t met your burden
of proof. So it’s not that I don’t think it didn’t happen
the way you’re saying, I just don’t think you proved
it.”
The above quoted portions of the record show a violation of
due process. BBRC was not permitted a fair opportunity to
present its evidence. “[A] party’s opportunity to call witnesses to
testify and to proffer admissible evidence is central to having his
or her day in court.” (Elkins v. Superior Court (2007) 41 Cal.4th
1337, 1357.) The dialogue quoted above suggests that the trial
court had prejudged the issues, and did not maintain an “‘“open
mind until all the evidence [was] presented to him.”’” (Carlsson,
supra, 163 Cal.App.4th at p. 291.) Instead of using its
discretionary power to exclude certain irrelevant or cumulative
evidence, the court simply denied BBRC the right to make its
case, arbitrarily limiting BBRC’s access to court time and forcing
BBRC to cut its witness list dramatically. (Ibid.) In addition, the
court kept a strict clock running, warning counsel periodically to
use his remaining time wisely. “The trial court essentially ran
the trial on a stopwatch, curtailing the parties’ right to present
evidence on all material disputed issues.” (Id. at p. 292.) The
record shows BBRC’s counsel repeatedly asking the court for an
opportunity to present more evidence, and repeatedly being
30
denied this opportunity. This amounted to a denial of
fundamental fairness.
As further evidence that the trial court had prejudged the
issues, the court then granted a motion for judgment in favor of
the defense on the ground that BBRC had not proved its case. To
so significantly curtail BBRC’s presentation of evidence, then
assert that BBRC had failed to prove its case, constitutes
fundamental unfairness in violation of due process.
C. Automatic reversal is appropriate
“[C]ourts have consistently applied the rule of automatic
reversal where a party is prevented from having his or her full
day in court.” (Carlsson, supra, 163 Cal.App.4th at p. 293.) “The
failure to accord a party litigant his constitutional right to due
process is reversible per se, and not subject to the harmless error
doctrine.” (Ibid.) When a trial court arbitrarily cuts off the
presentation of evidence, the error infects “the integrity of the
trial” and requires “reversal without regard to an assessment of
actual prejudice.” (Id. at p. 294.)
Hou’s estate relies on California Crane School, Inc. v.
National Com. for Certification of Crane Operators (2014) 226
Cal.App.4th 12 (Crane) for the proposition that BBRC is required
to show a miscarriage of justice before reversal in this matter.
Crane is distinguishable. It involved a trial for antitrust and
unfair competition violations. Although the appellants had
provided a four- to six-week time estimate in their pretrial brief,
the trial court provided the parties with a “‘target’” of “‘nine to
ten days’” given the narrowing of issues that the parties had
accomplished before trial. (Id. at p. 17.) Appellants proceeded at
a slow pace thoughout trial and were admonished several times
by the trial judge. (Id. at pp. 17-18.) Although the parties agreed
31
that respondents would get to start on the morning of the eighth
day of trial, appellants continued with their case-in-chief until
the afternoon of the ninth day of trial. (Id. at p. 18.) “The court
told the parties the case had to go to the jury the next day or they
would lose a juror . . . .” (Ibid.) Respondents complained that
appellants were taking longer to cross-examine respondents’
witnesses than appellants took on direct examination. (Ibid.)
When additional juror scheduling problems came to light, the
parties agreed to limit their closing arguments to one hour each.
(Ibid.) However, appellants protested that they had not been
permitted to rebut respondents’ evidence. (Ibid.) The case was
argued to the jury on the afternoon of the 11th day of trial and
the jury began its deliberations on the 12th day of trial. (Id. at
p. 19.)
Under the circumstances present in the Crane case, the
trial court provided reasonable limits on the length of the trial.
The Crane court explained that trial judges must do their best to
assure that all court cases assigned to them are “fairly and
efficiently” heard and decided. (Crane, supra, 226 Cal.App.4th at
p. 19.) Further, parties often overestimate or underestimate a
trial’s potential length, so a trial judge must do its best to predict
the length of trial given these ambiguities. (Id. at p. 20.)
Significantly, in the Crane case, the parties did not object to the
trial court’s 10-day estimate. “While appellants stated the
timeframe was ‘optimistic,’ they did not object or provide any
rationale why the trial could not be completed within that time
period.” (Id. at p. 23.) Further, the record suggested that
appellants were deliberately mismanaging their case-in-chief,
taking longer with each witness than they initially predicted.
(Id. at pp. 23-24.) Under those circumstances, “the trial court did
32
not abuse its discretion in holding appellants to the trial
schedule.” (Id. at p. 24.)
The matter before us is different. Here, BBRC repeatedly
objected to the five-hour time limit imposed by the court. BBRC
significantly cut its witness list, and was repeatedly cut off by the
trial court when it made an effort to present an offer of proof as to
why it needed more time. While the Crane case provides an
example of the reasonable use of the court’s discretionary power
to control the proceedings, this case provides an example of
fundamental unfairness.
In addition, Hou’s estate cannot complain that BBRC has
not shown prejudice because BBRC was not able to present much
of the evidence it sought to present. For example, in the final
argument regarding the estate’s motion for judgment, BBRC
complained that it was not able to explore the possibility of
improper self-dealing or breach of fiduciary duty. In rejecting the
argument, the court relied on BBRC’s failure to present sufficient
evidence:
“I’m not sure that you’ve established self-dealing. I’m
not sure that you’ve established any clear and
convincing evidence that you can rebut the title. It
seems like he was in his authority to do this. Was it
self-dealing? Maybe. I mean, if he’s still liable to
Ms. Webb to pay for the property because she loaned
him the money, that needs to be addressed. But does
that invalidate the title? Not on this record.”
It is fundamentally unfair to suggest that BBRC did not
establish a claim when it was not permitted to present all of its
evidence.
33
D. Conclusion
BBRC was prevented from having its full and fair day in
court. Automatic reversal is appropriate. (Carlsson, supra, 163
Cal.App.4th at p. 293.)13
DISPOSITION
The judgment is affirmed in part and reversed in part. The
order granting Chi-Li’s motion for summary adjudication is
affirmed. The order granting the Estate of Hou’s motion for
judgment as to the Gale property is reversed and the matter is
remanded for a new trial. Chi-Li is awarded her costs of appeal.
All other parties to bear their own costs.
________________________, J.
CHAVEZ
We concur:
________________________, P. J.
LUI
________________________, J.
ASHMANN-GERST
13 Because we reverse and remand this matter for a new trial
on due process grounds, we need not address the other issues
BBRC has raised regarding the ruling on the Gale property: (1)
that nonsuit was improper considering the evidence admitted
during BBRC’s case-in-chief, (2) that the trial court applied an
improper evidentiary standard under Evidence Code section 662,
and (3) that the trial court erred in failing to consider
Corporations Code section 9243.
34