Hsieh v. Hsieh

CHIH WU HSIEH, Plaintiff and Respondent, v. YANNIK HSIEH, Defendant and Appellant.

B283227

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

October 15, 2019

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. GC047528)

APPEAL from a judgment of the Superior Court of Los Angeles County, William D. Stewart, Judge. Affirmed.

Early Sullivan Wright Gizer & McRae, Stephen Y. Ma, Diane M. Luczon and Zachary A. Gidding for Defendant and Appellant.

Paoli & Purdy and William M. Paoli for Plaintiff and Respondent.

Yannik Hsieh, also known as Jason Hsieh (Jason),¹ appeals from a judgment in favor of his father, Chih Wu Hsieh (Chih), entered after a court trial in which the court found Jason was obligated to pay over $4 million to Chih as a result of fraudulent transfers of community property to Jason from his mother, Jui Chih Wang Hsieh, also known as Ruth Jui Chih Hsieh (Ruth), who was Chih's former wife.

In the first phase of the bifurcated trial, the trial court found Chih's claims were barred by the four-year statute of limitations under the Uniform Fraudulent Transfer Act (UFTA; Civ. Code, former § 3439 et seq.).² Chih appealed, and we reversed. (Hsieh v. Hsieh (Mar. 2, 2015, B250938) [nonpub. opn.] (Hsieh I).) We concluded the common law statute of limitations for fraudulent conveyances under Code of Civil Procedure section 338, subdivision (d), applied, under which Chih's claims were timely. However, we remanded for the trial court to determine whether Chih's action was barred as to specific transfers by the seven-year limitations period under section 3439.09, subdivision (c). (Hsieh I, supra, B250938.)

On remand, Chih and Jason stipulated that six allegedly fraudulent transfers between 2004 and 2007 were not barred by the seven-year statute of limitations. After hearing testimony from Chih and Jason, the trial court found Chih had met his burden to show the transfers from Ruth to Jason were fraudulent. In reaching its ruling, the court relied on a prior judgment entered in the family court proceeding between Chih and Ruth. On appeal, Jason contends the trial court erred in considering the findings of the court in the family court proceeding because he was not a party or in privity with a party to the proceeding and substantial evidence does not support the judgment. In addition, Jason argues the trial court erred in denying his ex parte application filed two weeks before trial to continue the trial so he could obtain discovery of foreign bank records reflecting the transfers of funds into and out of his bank accounts.

Although Jason is correct the trial court erred in relying on the judgment entered by the family court, the error was harmless in light of the overwhelming evidence at trial showing the transfers were fraudulent, and thus it is not reasonably probable Jason would have achieved a more favorable result had the trial court not relied on the default judgment. Further, the trial court did not abuse its discretion in denying a trial continuance. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Family Law Proceedings³

Chih and Ruth were married in 1966. As of 1997, Chih was living in Taipei and Ruth was living in the United States. On September 22, 1997 Ruth filed a petition for legal separation (1997 separation action), and on November 12, 1998 she filed a petition for dissolution of marriage.

Ruth did not serve Chih with the summons and petition in either the 1997 or 1998 proceedings. As a result, Chih did not appear in either action, and default judgments were entered against him. The default judgments were later set aside, and on August 7, 10, and 11, 2009 the court held an evidentiary trial in the 1997 separation action. Ruth failed to appear at trial, and the family court entered a judgment in favor of Chih on January 7, 2010 (family court judgment). The family court ordered Ruth, pursuant to Family Code section 1101, subdivision (h), to pay Chih 100 percent of the amount of community property funds transferred to Jason, finding the transfers were made in violation of the family court automatic temporary restraining orders (ATRO's) and in breach of Ruth's fiduciary duties. The court also found Ruth's actions were malicious, oppressive, and fraudulent.

B. The Filing of the Complaint and Statute of Limitations Trial

Chih filed this action against Ruth, Jason, and John⁴ on June 10, 2011, alleging causes of action for fraudulent transfer and conversion. At a case management conference on March 21, 2013, the trial court⁵ issued a tentative ruling suggesting Chih had a "statute of limitations issue." At the conference, Jason's attorney objected to Chih using the family court judgment against Jason, arguing the elements of collateral estoppel had not been met. The attorney argued Jason was not a party to the family court proceeding, he was not on notice, "and his interests weren't represented. He didn't know his property rights were being affected . . . ."

By the time of trial, Ruth had been dismissed, and John was in default. The trial court bifurcated the trial as to Jason's statute of limitations defense, which trial was held on April 22, 2013. (Hsieh I, supra, B250938.) Both Chih and Jason were represented by counsel at trial. However, neither Chih nor Jason appeared. Instead, the statute of limitations phase of the trial proceeded on stipulated facts.

Jason's attorney argued that under the UFTA, Chih was barred from filing a claim as to any transfers made more than four years before he filed the complaint on June 10, 2011.⁶Jason's attorney also noted that Chih's attorney in the family court trial prepared the proposed statement of decision on October 6, 2009, which itemized "every single transfer that's the subject of this case." Thus, Chih was aware of the transfers at least as of this date. Jason's attorney argued Chih was therefore barred from filing a claim as to any transfers made before June 10, 2007, and the one-year discovery period did not apply because Chih was aware of the transfers more than one year before he filed the complaint.

After hearing argument of counsel, the trial court invited the parties to make a record of documents they wanted the court to receive into evidence. The trial court marked the family court judgment as exhibit 1 and stated, "I'll have it received into evidence." The following discussion on the record followed:

"[Jason's counsel]: "Your Honor, . . . obviously if this goes to trial, we'll be discussing whether or not we think it's admissible as to any other matters.

"The court: Right. Any objection to this being received?

"[Jason's counsel]: Not for this purpose, no.

"The court: Then the court does take judicial notice. This is plaintiff's 1.

"[Chih's counsel]: Is it for this specific bifurcation trial only, or is it for the entire case?

"The court: No. I thought we were just trying statute of limitations.

"[Chih's counsel]: Great. Thank you."

After admitting additional exhibits, the trial court held Chih's claims were barred by the four-year statute of limitations under section 3439.09. (Hsieh I, supra, B250938.) The court concluded the action was barred because all of the allegedtransfers to Jason occurred prior to June 10, 2007 (four years before the filing of the complaint), and Chih had notice of the alleged fraudulent transfers more than one year prior to the filing of the complaint. (Ibid.) On June 18, 2013 the court entered judgment in favor of Jason. (Ibid.)

C. Hsieh I

In Hsieh I, we concluded the four-year statute of limitations under the UFTA, section 3439.09, subdivision (a), did not apply to bar Chih's claims. (Hsieh I, supra, B250938.) Instead, Chih could maintain his claim for the common law tort of fraudulent conveyance, as to which the three-year statute of limitations under Code of Civil Procedure section 338, subdivision (d), did not run until three years after Chih obtained the family court judgment against Ruth—on January 7, 2010. Thus, Chih's lawsuit, filed in 2011, was timely. (Hsieh I, supra, B250938.) However, we also concluded the seven-year statute of limitations under section 3439.09, subdivision (c), applied to Chih's claims, which barred any fraudulent transfers made more than seven years before the filing of the complaint. (Hsieh I, supra, B250938.) We remanded for the trial court to "determine whether any of the alleged fraudulent transfers were made more than seven years prior to the filing of this action." (Ibid.)

D. Phase Two of the Trial on Remand

On remand, the parties stipulated that Chih's claims as to 10 alleged fraudulent transfers were barred by the statute of limitations because they were made prior to June 10, 2004, and judgment was entered in favor of Jason on those claims. The parties stipulated further that as to six allegedly fraudulenttransfers made after June 10, 2004, the transfers were not barred by the seven-year statute of limitations under section 3439.09, subdivision (c).

On July 21, 2016 Katherine Butts Warwick substituted in as counsel for Jason in place of his former attorney, Mark Warfel, who had represented both Jason and John. Warfel continued to represent John at trial. On July 21 Warwick also filed an ex parte application to continue the trial for six months so she could obtain bank records from the foreign banks into which the transfers of funds from Ruth were deposited. Specifically, she sought "an opportunity to obtain discovery of [Jason's] bank records," which she asserted would show Jason accepted the funds as an agent for Ruth and John. Warwick asserted she substituted in as counsel once it became evident there was a conflict between Jason and...