This case was last updated from Los Angeles County Superior Courts on 10/21/2020 at 04:05:13 (UTC).

HOWARD FUCHS VS JOEL WERTMAN ET AL

Case Summary

On 05/30/2018 HOWARD FUCHS filed a Property - Other Property Fraud lawsuit against JOEL WERTMAN. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is MONICA BACHNER. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****8135

  • Filing Date:

    05/30/2018

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Property - Other Property Fraud

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

MONICA BACHNER

 

Party Details

Plaintiff, Petitioner and Cross Defendant

FUCHS HOWARD

Defendants, Respondents and Cross Plaintiffs

PEREL LIZA G.

WERTMAN JOEL

PANAR AVIE

DOES 1 TO 25

ROWNTREE LENORE

MUSTARD PANCAKES INC.

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

BYBERG GREGORY B. ESQ.

BYBERG GREGORY BOWEN ESQ.

Attorney at Law Offices of Gregory B. Byberg

8055 West Manchester Avenue Suite 300

Playa Del Rey, CA 90293

BYBERG GREGORY B.

Defendant and Respondent Attorneys

DERBY PAUL B.

ROSENBERG RONALD G. ESQ.

DERBY PAUL BRENTWOOD

Attorney at Skiermont Derby LLP

800 Wilshire Boulevard Suite 1450

Los Angeles, CA 90017

ROSENBERG RONALD GLENN ESQ.

Attorney at Rosenberg & Koffman

2029 Century Park East Suite 1700

Los Angeles, CA 90024

HOUSE LAWRENCE PHILIP

Attorney at Law Offices of Lawrence P. House

525 Country Club Drive Suite C

Simi Valley, CA 93065

ANDERSON DREW

HOUSE LAWRENCE PHILLIP

Defendant and Cross Plaintiff Attorneys

HOUSE LAWRENCE PHILIP

Attorney at Law Offices of Lawrence P. House

525 Country Club Drive Suite C

Simi Valley, CA 93065

HOUSE LAWRENCE PHILLIP

Plaintiff and Cross Defendant Attorney

BYBERG GREGORY B.

 

Court Documents

Minute Order - MINUTE ORDER (RULING ON SUBMITTED MATTER)

7/30/2020: Minute Order - MINUTE ORDER (RULING ON SUBMITTED MATTER)

Certificate of Mailing for - CERTIFICATE OF MAILING FOR (DEMURRER OF DEFENDANT, JOEL WERTMAN, TO SECOND AMENDED COMPLAINT) OF 03/18/2020

3/18/2020: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (DEMURRER OF DEFENDANT, JOEL WERTMAN, TO SECOND AMENDED COMPLAINT) OF 03/18/2020

Ex Parte Application - EX PARTE APPLICATION TO SHORTEN TIME AND SPECIALLY SET HEARING ON DEMURRER TO SECOND AMENDED COMPLAINT

2/14/2020: Ex Parte Application - EX PARTE APPLICATION TO SHORTEN TIME AND SPECIALLY SET HEARING ON DEMURRER TO SECOND AMENDED COMPLAINT

Demurrer - without Motion to Strike

2/11/2020: Demurrer - without Motion to Strike

Reply - REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN REPLY TO OPPOSITION TO EX PARTE APPLICATION FOR JUDGMENT OF DISMISSAL

1/15/2020: Reply - REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN REPLY TO OPPOSITION TO EX PARTE APPLICATION FOR JUDGMENT OF DISMISSAL

Notice of Ruling

1/15/2020: Notice of Ruling

Minute Order - MINUTE ORDER (EX PARTE APPLICATION OF DEFENDANT, AVIE PANAR, DEFENDANTS AND...)

1/17/2020: Minute Order - MINUTE ORDER (EX PARTE APPLICATION OF DEFENDANT, AVIE PANAR, DEFENDANTS AND...)

Notice of Ruling

12/18/2019: Notice of Ruling

Notice of Ruling

10/1/2019: Notice of Ruling

Opposition - OPPOSITION TO DEFENDANT AVIE PANAR'S MOTION TO COMPEL FURTHER RESPONSES TO DEFENDANT'S SPECIAL INTERROGATORIES, SET NO TWO, AND OPPOSITION TO REQUEST FOR SANCTIONS

9/17/2019: Opposition - OPPOSITION TO DEFENDANT AVIE PANAR'S MOTION TO COMPEL FURTHER RESPONSES TO DEFENDANT'S SPECIAL INTERROGATORIES, SET NO TWO, AND OPPOSITION TO REQUEST FOR SANCTIONS

Order - RULING

8/27/2019: Order - RULING

Motion to Deem RFA's Admitted - MOTION TO DEEM RFA'S ADMITTED AND REQUEST FOR ISSUANCE OF AN ORDER TO SHOW CAUSE

8/28/2019: Motion to Deem RFA's Admitted - MOTION TO DEEM RFA'S ADMITTED AND REQUEST FOR ISSUANCE OF AN ORDER TO SHOW CAUSE

Amended Complaint

7/8/2019: Amended Complaint

Motion to Compel Further Discovery Responses - MOTION TO COMPEL FURTHER DISCOVERY RESPONSES CALIFORNIA RULES OF COURT, RULE 3.1345 STATEMENT IN SUPPORT OF MOTION TO COMPEL FURTHER RESPONSE TO FIRST SE

5/24/2019: Motion to Compel Further Discovery Responses - MOTION TO COMPEL FURTHER DISCOVERY RESPONSES CALIFORNIA RULES OF COURT, RULE 3.1345 STATEMENT IN SUPPORT OF MOTION TO COMPEL FURTHER RESPONSE TO FIRST SE

Motion to Compel Discovery (not Further Discovery) - 1 moving party, 1 motion

5/9/2019: Motion to Compel Discovery (not Further Discovery) - 1 moving party, 1 motion

Order - Ruling

3/5/2019: Order - Ruling

Opposition - Opposition PLAINTIFF'S OPPOSITION TO DEFENDANT LENORE ROUNTREE'S MOTION TO QUASH FOR LACK OF PERSONAL JURISDICTION AND INEFFECTIVE SERVICE OF PRECESS

1/14/2019: Opposition - Opposition PLAINTIFF'S OPPOSITION TO DEFENDANT LENORE ROUNTREE'S MOTION TO QUASH FOR LACK OF PERSONAL JURISDICTION AND INEFFECTIVE SERVICE OF PRECESS

DEFENDANT LENORE ROWNTREE'S MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

8/1/2018: DEFENDANT LENORE ROWNTREE'S MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

115 More Documents Available

 

Docket Entries

  • 01/19/2021
  • Hearing01/19/2021 at 10:00 AM in Department 71 at 111 North Hill Street, Los Angeles, CA 90012; Non-Jury Trial

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  • 01/08/2021
  • Hearing01/08/2021 at 09:00 AM in Department 71 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 12/10/2020
  • Hearing12/10/2020 at 09:30 AM in Department 71 at 111 North Hill Street, Los Angeles, CA 90012; Status Conference

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  • 12/10/2020
  • Hearing12/10/2020 at 09:30 AM in Department 71 at 111 North Hill Street, Los Angeles, CA 90012; Order to Show Cause Re: Failure to File Proof of Service

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  • 08/17/2020
  • DocketAnswer (TO UNVERIFIED SECOND AMENDED COMPLAINT); Filed by Joel Wertman (Defendant)

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  • 07/30/2020
  • Docketat 08:07 AM in Department 71, Monica Bachner, Presiding; Ruling on Submitted Matter

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  • 07/30/2020
  • DocketRuling on Submitted Matter; Filed by Clerk

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  • 07/30/2020
  • DocketMinute Order ( (Ruling on Submitted Matter)); Filed by Clerk

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  • 07/30/2020
  • DocketCertificate of Mailing for ((Ruling on Submitted Matter) of 07/30/2020, Ruling on Submitter Matter); Filed by Clerk

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  • 07/21/2020
  • Docketat 1:30 PM in Department 71, Monica Bachner, Presiding; Hearing on Demurrer - without Motion to Strike ((to Second Amended Complaint) - Held - Taken under Submission

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175 More Docket Entries
  • 08/01/2018
  • DocketDECLARATION OF DEFENDANT LENORE ROWNTREE IN SUPPORT OF MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

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  • 08/01/2018
  • DocketDEFENDANT LENORE ROWNTREE'S MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PERSONAL JURISDICTION

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  • 07/18/2018
  • DocketMOTION TO QUASH FOR LACK OF PERSONAL JURISDICTION AND INEFFECTIVE SERVICE OF PROCESS; MEMORANDUM OF POINTS AND AUTHORITIES AND DECLARATIONS IN SUPPORT THEREOF

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  • 07/18/2018
  • DocketMotion to Quash Service of Summons; Filed by Avie Panar (Defendant)

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  • 06/06/2018
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 06/06/2018
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 05/30/2018
  • DocketPLAINTIFF'S COMPLAINT FOR 1. ACTUAL FRAUDULENT TRANSFER ;ETC

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  • 05/30/2018
  • DocketComplaint; Filed by Howard Fuchs (Plaintiff)

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  • 05/30/2018
  • DocketSUMMONS

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  • 01/18/2018
  • DocketMotion to Quash; Filed by Defendant/Respondent

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Tentative Rulings

Case Number: BC708135    Hearing Date: July 21, 2020    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

HOWARD FUCHS

vs.

JOEL WERTMAN, et al.

Case No.: BC708135

Hearing Date: July 21, 2020

Defendant Joel Wertman’s demurrer to second amended complaint of Plaintiff Howard Fuchs is sustained with leave to amend.

Defendant Joel Wertman (“Defendant”) demurs to the 1st (actual fraudulent transfer) and 2nd (constructive fraudulent transfer) causes of action in the second amended complaint (“SAC”) of Plaintiff Howard Fuchs (“Plaintiff”). (Notice of Demurrer, pg. 1.) Defendant argues Plaintiff failed to allege sufficient facts to constitute the causes of action. (Notice of Demurrer, pg. 1.)

Defendants Lenore Rowntree (“Rowntree”) and Avie Panar (“Panar”) were dismissed from the action, with prejudice, on January 9, 2020 and January 17, 2020, respectively. On December 11, 2020, the Court sustained Rowntree’s demurrer to Plaintiff’s first amended complaint (“FAC”) with 20 days leave to amend; however, Plaintiff failed to file an amended pleading within that time frame. On January 15, 2020, Plaintiff filed his SAC against Defendant, Panar, and Defendant Liza G. Perel (“Perel”). (SAC ¶¶2-6.) The SAC has removed references to Rowntree in its allegations; however, allegations to Panar remain. In addition, Rowntree and Panar are still listed in the caption of the SAC. In light of the dismissals, the SAC remains operative only as to Defendant and Perel.

On February 11, 2020, Defendant filed the instant demurrer, originally noticed to be heard on April 28, 2020. Defendant filed a meet and confer declaration indicating that Defendant’s counsel wrote to Plaintiff’s counsel to discuss the bases for a demurrer prior to Defendant’s filing of the demurrer as required by C.C.P. §430.41(a)(3), and that Plaintiff’s counsel did not respond. (Decl. of House ¶2, Exhs. 1, 2.) The hearing on the demurrer was continued to June 24, 2020. Plaintiff did not file an opposition and at the hearing, the Court continued the hearing to July 21, 2020, instructing that any opposition to be filed would be pursuant to code. (6/24/20 Minute Order.) Plaintiff filed an opposition on July 13, 2020. On July 14, 2020, Defendant filed a reply.

Plaintiff’s opposition is untimely. Given the July 21, 2020 hearing date, the opposition was due nine Court days before, on July 8, 2020; however, Plaintiff filed his opposition on July 13, 2020. (C.C.P. §1005(b).) The Court notes that Plaintiff did not file oppositions pursuant to code for the previously scheduled hearing dates. However, the Court will consider the untimely opposition.

Plaintiff’s opposition is 23 pages in violation of the 15-page limit set forth in CRC Rule 3.1113(d). In this instance, the Court elects to consider the opposition; however, in the future, pages of filings that exceed the page-limit set forth in the rules will be struck and not considered by the Court.

The instant action arises out of Plaintiff’s enforceable sister state judgment against Defendant, and Defendant’s alleged subsequent acts to avoid enforcement of the judgment. Plaintiff alleged he filed an action against Defendant in New York State for Defendant’s breach of a loan agreement, Plaintiff obtained a New York State judgment against Defendant, and Plaintiff subsequently obtained a judgment California based on the New York Sister State Judgment. (SAC ¶11.) Plaintiff alleged the Notice of Entry of Judgment on Sister-State Judgment was entered on August 29, 2016 and the Court denied Defendant’s motion to vacate and stay enforcement of the Sister State Judgment on April 14, 2017, making the $1,917,336.23 judgment enforceable against Defendant on that date. (SAC ¶11; Exhs. A, B.) Plaintiff alleged thereafter, on April 20, 2017, Defendant and Perel transferred their only substantial asset, real property located at 6517 Whitworth Dr. Los Angeles, CA 90035 (“Property”), to Panar via a Deed of Trust that named Rowntree as trustee. (SAC ¶12, Exh. C.) Plaintiff alleged the Deed of Trust for $1,800,000 was recorded against the Property to secure an alleged November 21, 2004 Promissory Note, and although the Deed of Trust’s face page bears the date of November 21, 2004, it was not signed, executed, notarized or filed until 13 years later on April 20, 2017. (FAC ¶12, Exh. C.) Plaintiff alleged he immediately applied for an Abstract of Judgment to prevent Defendant from transferring the Property; however, Plaintiff was unable to file an Abstract of Judgment until November 3, 2017, after the Deed of Trust had been recorded against the Property. (SAC ¶¶12, 13, Exh. D.)

A review of the SAC demonstrates that, aside from removing references to Rowntree, the only change in the SAC is paragraph 26, in which Plaintiff adds further allegations to support the assertion that the Deed of Trust did not exist until April 20, 2019. (SAC ¶26, pg. 16:2-22.) Plaintiff alleges because the 2004 Deed of Trust was never executed by the parties and not notarized until April 2017, it was not a deed of trust until that date, and “represents the fraudulent transfer of” the assets of Defendant. (SAC ¶26.) Plaintiff alleges that a promissory note alone that refers to an unsigned deed of trust is not an incumbrance on property and even if the loan referred to in the promissory note were made, such a loan does not become an encumbrance on real property without first satisfying the legal requirements of a deed of trust. (SAC ¶26.)

Actual Fraudulent Transfer (1st COA)

“A fraudulent conveyance claim is set forth in the Uniform Fraudulent Transfer Act (UFTA), which is codified in Civil Code section 3439 et seq. ‘A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.’ [Citation] A transfer under the UFTA is defined as ‘every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset…, and includes payment of money, release, lease, and creation of a lien or other encumbrance.’ [Citation] ‘A transfer of assets made by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer, if the debtor made the transfer (1) with an actual intent to hinder, delay or defraud any creditor [actual fraudulent transfer], or (2) without receiving reasonably equivalent value in return [constructive fraudulent transfer], and either (a) was engaged in or about to engage in a business or transaction for which the debtor’s assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due. [Citations.]’ [Citations]” (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 648.) (See also Civil Code §§3439.01, 3439.04, 3439.05.) In addition, property already, “encumbered by a valid lien,” does not qualify as a debtor asset under UFTA. (Civil Code §3439.01(a)(1)-(2).)

Plaintiff failed to allege sufficient facts to constitute the cause of action for actual fraudulent transfer against Defendant. Plaintiff fails to allege facts suggesting the 2017 recording of the Deed of Trust against the Property amounts to a transfer of a “debtor’s asset” under the UFTA. Plaintiff’s allegations that the Deed of Trust encumbered the Property, and that by recording it Defendant and Perel transferred their primary asset, rely on the allegation that the 2004 Promissory Note the Deed of Trust secured was either non-existent or not of sufficient importance to cause the parties to record a Deed of Trust securing it during the 13 years prior to 2017. (SAC ¶¶12, 20, 36.) Allegations that the Promissory Note securing the Deed of Trust was not sufficiently important to record suggest the Note existed for 13 years but was just unrecorded. If the Note existed in 2004, it would qualify as an encumbrance on the Subject Property, notwithstanding the fact it was not recorded until 2017. The recording of an existing encumbrance does not amount to a transfer of an asset under the UFTA.

Plaintiff does not allege facts supporting his contention that the Note underlying the Deed of Trust is a sham. (SAC ¶¶12, 14.) Plaintiff alleged that the Deed of Trust is itself a sham as demonstrated by: (1) the difference in the value of the Promissory Note ($426,000) and the Deed of Trust ($1,800,000); (2) the fact that Panar and Rountree reside in Vancouver, Canada; and (3) the fact Panar and Rountree are believed to be family members of Wertman and Perel. (SAC ¶¶12, 20.) However, these allegations do not address whether the Note itself was a sham or creation by Defendant and Perel. The Court notes Plaintiff alleged that in order to defeat Plaintiff’s ability to collect his judgment, Defendant and Perel created a sham Promissory Note for which no Deed of Trust existed and then created, signed, notarized, and recorded that Deed of Trust after entry of Judgment in favor of Plaintiff to prevent Plaintiff from collecting, levying, or seizing the Property. (SAC ¶14.) Plaintiff appears to suggest that the creation of the Promissory Note occurred after judgment was entered in Plaintiff’s favor, in which case the Note would not in fact amount to a prior encumbrance on the Property since it would have been a fraudulent, after-the-fact creation. However, given allegations suggesting Defendant and Perel “waited” 13 years before recording the Note, it is not clear that Plaintiff alleges no loan underlying the 2004 Note ever occurred making the Note fraudulent.

The Court notes that Plaintiff alleges that Panar is a necessary party to the action as the transferee of the subject Deed of Trust and that he must be a party at the time of rendition of judgment. (SAC ¶4.) However, on January 17, 2020, Panar was dismissed by the Court in ruling on Defendants’ ex parte application for dismissal and is no longer a party to the action. In opposition, Plaintiff disputes Panar’s dismissal from the action as improperly based on a false declaration stating someone personally called and spoke with Plaintiff’s counsel, an event Plaintiff’s counsel asserts never occurred. (Opposition, pg. 21.) Plaintiff asserts he intends to file a C.C.P. §473(b) application to set aside the dismissal and, if successful, intends to amend the operative pleading to allege sufficient facts for “their inclusion.” (Opposition, pg. 21.) However, the Court is not in receipt of a C.C.P. §473(b) application to set aside dismissal, and, even assuming arguendo Panar were still a party to this action, for the reasons discussed above Plaintiff’s SAC fails to allege sufficient facts to constitute the cause of action independent of the presence of an alleged indispensable party.

While Plaintiff bears the burden of proving there is a reasonable possibility of amendment, the Court finds the SAC, on its face, does not show it is incapable of amendment to cure the defects discussed above if Plaintiff can allege the loan and Promissory Note were a sham and/or did not in fact exist as a valid encumbrance on the property. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318; see also Virginia G. v. ABC Unified School Dist. (1993) 15 Cal.App.4th 1848, 1852 [“In the case of…a demurrer…, leave to amend should be granted if there is any reasonable possibility that the plaintiff can state a good cause of action… denial of leave to amend constitutes an abuse of discretion if the pleading does not show on its face that it is incapable of amendment.”].)

Based on the foregoing, Defendant’s demurrer to the 1st cause of action is sustained with leave to amend.

Constructive Fraudulent Transfer (2nd COA)

As discussed above, while actual fraudulent transfer includes the element of actual intent to defraud, a cause of action for constructive fraudulent transfer only exists where, “ ‘the debtor made the transfer… without receiving reasonably equivalent value in return, and either (a) was engaged in or about to engage in a business or transaction for which the debtor’s assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due. [Citations.]’ [Citations]” (Kirkeby v. Superior Court, supra 33 Cal.4th at 648.) (See also Civil Code §§3439.01, 3439.04, 3439.05.)

For the reasons discussed above, Plaintiff failed to allege sufficient facts to constitute the cause of action for constructive fraudulent transfer against Defendant. As a threshold issue, Plaintiff failed to allege sufficient facts to suggest a transfer of a debtor’s asset occurred when the Deed of Trust was recorded, given it was securing an alleged encumbrance of property that occurred in 2004 via the Promissory Note.

If Plaintiff were to allege facts to suggesting the Deed of Trust qualified as a transfer of a debtor’s asset under the UFTA, the Court would then address whether such a transfer was done with actual or constructive intent to defraud a creditor. The alleged facts relating to the timing of the Deed of Trust occurring shortly after the Court denied Defendant’s motion to stay enforcement of the sister state judgment do suggest Defendant recorded the Deed of Trust at a moment he reasonably believed that debts that he had previously incurred would become due in amounts beyond his ability to pay them. As such, by recording the Deed of Trust on the Property assigning interest in the property to Panar and Rountree, Defendant and Perel both created a lien and parted with an asset—presuming the asset, the value of the property, was one Defendant and Perel could part with and not already owed to Rountree and Panar as suggested by the 2004 Note. In addition, taking as true Plaintiff’s allegation that the 2004 Promissory Note never existed and is a sham, Defendant would have transferred the Deed of Trust securing the Property “without receiving reasonably equivalent value in return.” As such, Plaintiff may be able to allege sufficient facts for the purposes of a demurrer to show actual or constructive intent to defraud. However, as alleged, the SAC’s allegations fail to establish the threshold issue of whether a transfer of a debtor’s asset occurred when the Deed of Trust was recorded, given allegations suggesting the Promissory Note secured a 2004 loan that was never recorded.

Based on the foregoing, Defendant’s demurrer to the 2nd cause of action is sustained with leave to amend.

Case Number: BC708135    Hearing Date: June 24, 2020    Dept: 71

Defendant Joel Wertman’s unopposed demurrer to second amended complaint of Plaintiff Howard Fuchs is sustained without leave to amend.

Defendant Joel Wertman (“Defendant”) demurs to the 1st (actual fraudulent transfer) and 2nd (constructive fraudulent transfer) causes of action in the second amended complaint (“SAC”) of Plaintiff Howard Fuchs (“Plaintiff”). (Notice of Demurrer, pg. 1.) Defendant argues Plaintiff failed to allege sufficient facts to constitute the causes of action. (Notice of Demurrer, pg. 1.)

As a preliminary matter, the Court notes that Defendants Lenore Rowntree (“Rowntree”) and Avie Panar (“Panar”) were dismissed from the action, with prejudice, on January 9, 2020 and January 17, 2020, respectively. On December 11, 2020, the Court sustained Rowntree’s demurrer to Plaintiff’s first amended complaint (“FAC”) with 20 days leave to amend; however, Plaintiff failed to file an amended pleading within that time frame. On January 15, 2020, Plaintiff filed his SAC against Defendant, Panar, and Defendant Liza G. Perel (“Perel”). (SAC ¶¶2-6.) The Court notes that the SAC has removed references to Rowntree in its allegations; however, allegations to Panar remain. In addition, Rowntree and Panar are still listed in the caption of the SAC. In light of the dismissals, the SAC remains operative only as to Defendant and Perel.

Defendant filed a meet and confer declaration indicating that Defendant’s counsel wrote to Plaintiff’s counsel to discuss the bases for a demurrer prior to Defendant’s filing of the demurrer as required by C.C.P. §430.41(a)(3), and that Plaintiff’s counsel did not respond. (Decl. of House ¶2, Exhs. 1, 2.)

By way of background, the instant action arises out of Plaintiff’s enforceable sister state judgment against Defendant, and Defendant’s alleged subsequent acts to avoid enforcement of the judgment. Plaintiff alleged that he filed an action against Defendant in New York State for Defendant’s breach of a loan agreement, that Plaintiff obtained a New York State judgment against Defendant, and that Plaintiff subsequently obtained a judgment California based on the New York Sister State Judgment. (SAC ¶11.) Plaintiff alleged that Notice of Entry of Judgment on Sister-State Judgment was entered on August 29, 2016 and that the Court denied Defendant’s motion to vacate and stay enforcement of the Sister State Judgment on April 14, 2017, making the $1,917,336.23 judgment enforceable against Defendant on that date. (SAC ¶11; Exhs. A, B.) Plaintiff alleged that thereafter, on April 20, 2017, Defendant and Perel transferred their only substantial asset, real property located at 6517 Whitworth Dr. Los Angeles, CA 90035 (“Property”), to Panar via a Deed of Trust that named Rowntree as trustee. (SAC ¶12, Exh. C.) Plaintiff alleged that the Deed of Trust for $1,800,000 was recorded against the Property to secure an alleged November 21, 2004 Promissory Note, and that although the Deed of Trust’s face page bears the date of November 21, 2004, it was not signed, executed, notarized or filed until 13 years later on April 20, 2017. (FAC ¶12, Exh. C.) Plaintiff alleged that he immediately applied for an Abstract of Judgment to prevent Defendant from transferring the Property; however, Plaintiff was unable to file an Abstract of Judgment until November 3, 2017, after the Deed of Trust had been recorded against the Property. (SAC ¶¶12, 13, Exh. D.)

A review of the SAC demonstrates that, aside from removing references to Rowntree, the only change in the SAC is paragraph 26, in which Plaintiff adds further allegations to support the assertion that the Deed of Trust did not exist until April 20, 2019. (SAC ¶26, pg. 16:2-22.) Plaintiff alleges that because the 2004 Deed of Trust was never executed by the parties and not notarized until April 2017, it was not a deed of trust until that date, and “represents the fraudulent transfer of” the assets of Defendant. (SAC ¶26.) Plaintiff alleges that a promissory note alone that refers to an unsigned deed of trust is not an incumbrance on property and that even if the loan referred to in the promissory note were made, such a loan does not become an encumbrance on real property without first satisfying the legal requirements of a deed of trust. (SAC ¶26.)

Actual Fraudulent Transfer (1st COA)

“A fraudulent conveyance claim is set forth in the Uniform Fraudulent Transfer Act (UFTA), which is codified in Civil Code section 3439 et seq. ‘A fraudulent conveyance is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.’ [Citation] A transfer under the UFTA is defined as ‘every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset…, and includes payment of money, release, lease, and creation of a lien or other encumbrance.’ [Citation] ‘A transfer of assets made by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer, if the debtor made the transfer (1) with an actual intent to hinder, delay or defraud any creditor [actual fraudulent transfer], or (2) without receiving reasonably equivalent value in return [constructive fraudulent transfer], and either (a) was engaged in or about to engage in a business or transaction for which the debtor’s assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due. [Citations.]’ [Citations]” (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 648.) (See also Civil Code §§3439.01, 3439.04, 3439.05.) In addition, property already, “encumbered by a valid lien,” does not qualify as a debtor asset under UFTA. (Civil Code §3439.01(a)(1)-(2).)

Plaintiff failed to allege sufficient facts to constitute the cause of action for actual fraudulent transfer against Defendant. Plaintiff fails to allege facts suggesting the 2017 recording of the Deed of Trust against the Property amounts to a transfer of a “debtor’s asset” under the UFTA. Plaintiff’s allegations that the Deed of Trust encumbered the Property, and that by recording it Defendant and Perel transferred their primary asset, still rely on the allegation that the 2004 Promissory Note the Deed of Trust secured was either non-existent or not of sufficient importance to cause the parties to record a Deed of Trust securing it during the 13 years prior to 2017. (SAC ¶¶12, 20, 36.) Plaintiff’s allegations that the Promissory Note securing the Deed of Trust is either non-existent or did exist since 2004 but was not sufficiently important to record are contradictory. Moreover, if the Note existed in 2004, it would qualify as an encumbrance on the Subject Property, notwithstanding the fact it was not recorded until 2017. The recording of an existing encumbrance would not amount to a transfer of an asset under the UFTA. To the extent Plaintiff alleges the loan underlying the 2004 Note does not exist or never occurred, thereby making the Deed of Trust recording it fraudulent, Plaintiff’s allegations that Defendant and Perel waited 13 years before recording contradict this allegation. In addition, Plaintiff’s amended allegations do not cure this defect, as they make the conclusory assertion that the promissory note does not encumber the subject property without execution and recording of a deed of trust, which is not the case. (SAC ¶26.)

Plaintiff does not allege facts supporting his contention that the Note underlying the Deed of Trust is a sham. (SAC ¶¶12, 14.) Plaintiff alleged that the Deed of Trust is itself a sham as demonstrated by: (1) the difference in the value of the Promissory Note ($426,000) and the Deed of Trust ($1,800,000); (2) the fact that Panar and Rountree reside in Vancouver, Canada; and (3) the fact Panar and Rountree are believed to be family members of Wertman and Perel. (SAC ¶¶12, 20.) However, these allegations do not address whether the Note itself was a sham or creation by Defendant and Perel. The Court notes Plaintiff alleged that in order to defeat Plaintiff’s ability to collect his judgment, Defendant and Perel created a sham Promissory Note for which no Deed of Trust existed and then created, signed, notarized, and recorded that Deed of Trust after entry of Judgment in favor of Plaintiff to prevent Plaintiff from collecting, levying, or seizing the Property. (FAC ¶14.) Plaintiff appears to suggest that the creation of the Promissory Note occurred after judgment was entered in Plaintiff’s favor, in which case the Note would not in fact amount to a prior encumbrance on the Property since it would have been a fraudulent, after the fact creation. However, as alleged, and given allegations suggesting Defendant and Perel “waited” 13 years before recording, it is not clear that Plaintiff alleges no loan underlying the 2004 Note ever occurred making the Note fraudulent. Plaintiff’s allegations therefore still suggest that the Property may have been encumbered by a valid lien at the time the Deed of Trust was recorded.

In addition, Plaintiff alleges that Panar is a necessary party to the action as the transferee of the subject Deed of Trust and that he must be a party at the time of rendition of judgment. (SAC ¶4.) However, Panar was dismissed and is no longer a party to the action.

Plaintiff bears the burden of proving there is a reasonable possibility of amendment. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Plaintiff has not filed an opposition and has, therefore, not met his burden.

Based on the foregoing, Defendant’s unopposed demurrer to the 1st cause of action is sustained without leave to amend.

Constructive Fraudulent Transfer (2nd COA)

As discussed above, while actual fraudulent transfer includes the element of actual intent to defraud, a cause of action for constructive fraudulent transfer only exists where, “ ‘the debtor made the transfer… without receiving reasonably equivalent value in return, and either (a) was engaged in or about to engage in a business or transaction for which the debtor’s assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due. [Citations.]’ [Citations]” (Kirkeby v. Superior Court, supra 33 Cal.4th at 648.) (See also Civil Code §§3439.01, 3439.04, 3439.05.)

For the reasons discussed above, Plaintiff failed to allege sufficient facts to constitute the cause of action for constructive fraudulent transfer against Defendant. As a threshold issue, Plaintiff failed to allege sufficient facts to suggest a transfer of a debtor’s asset occurred when the Deed of Trust was recorded, given it was securing an alleged encumbrance of property that occurred in 2004 via the Promissory Note. If Plaintiff were to allege facts to suggesting the Deed of Trust qualified as a transfer of a debtor’s asset under the UFTA, the Court would then address whether such a transfer was done with actual or constructive intent to defraud a creditor. The alleged facts relating to the timing of the Deed of Trust occurring shortly after the Court denied Defendant’s motion to stay enforcement of the sister state judgment suggest Defendant recorded the Deed of Trust at a moment he reasonably believed that debts that he had previously incurred would become due in amounts beyond his ability to pay them. As such, by recording the Deed of Trust on the Property assigning interest in the property to Panar and Rountree, Defendant and Perel both created a lien and parted with an asset—presuming the asset, the value of the property, was one Defendant and Perel could part with and not already owed to Rountree and Panar as suggested by the 2004 Note. In addition, taking as true Plaintiff’s allegation that the 2004 Promissory Note never existed and is a sham, Defendant would have transferred the Deed of Trust securing the Property “without receiving reasonably equivalent value in return.” As such, Plaintiff may be able to allege sufficient facts for the purposes of a demurrer to show actual or constructive intent to defraud. However, the SAC’s allegations remain conclusory and insufficient to establish the threshold issue of whether a transfer of a debtor’s asset occurred when the Deed of Trust was recorded.

Plaintiff bears the burden of proving there is a reasonable possibility of amendment. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Plaintiff has not filed an opposition and has, therefore, not met his burden.

Based on the foregoing, Defendant’s unopposed demurrer to the 2nd cause of action is sustained without leave to amend.