Filed 10/30/19 Rice v. Kishiyama CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THIRD APPELLATE DISTRICT

(Placer)

—-

JERROLD R. RICE,

Plaintiff, Cross-defendant and Respondent,

v.

JAMES S. KISHIYAMA,

Defendant, Cross-complainant and Appellant;

DALE KISHIYAMA, as Special Administrator, etc.,

Cross-defendant and Respondent.

C084144

(Super. Ct. No. SCV0036923)

Defendant and cross-complainant James S. Kishiyama appeals from a judgment that determined the ownership interests in real property he and his late daughter had purchased. Raising a new theory on appeal, James contends the court erred by not voiding a deed which, if voided, would result in him receiving sole ownership of the property. He also argues the court erred when it refused to reimburse his pro-rata share of property expenses based on unclean hands.

We affirm the judgment.

FACTS AND LEGAL PROCEEDINGS

In March 2011, James and his daughter, Christina, purchased a house on Dewey Court in Lincoln. They each paid one-half of the total purchase price in the amounts of $92,731.60. Christina used funds from a personal injury settlement to pay her share.

Initially, James took title to the Dewey Court property as the sole owner. Four days later, on March 8, 2011, he conveyed the property’s title to himself, as an unmarried man, and to Christina, as an unmarried woman, as joint tenants.

James and Christina moved into the house. At about the same time, plaintiff and cross-defendant Jerrold R. Rice moved in with them. Jerrold did not contribute any funds for the purchase of the property and he had no legal interest in it. In May 2011, Christina and Jerrold were married.

In late 2012, Jerrold and Christina were interested in buying residential property in Yuba City. Jerrold retained a mortgage broker who was his and Christina’s friend to assist him with the loan application to buy the property. A potential lender, however, suspended the application because Jerrold’s debt-to-income ratio was not satisfactory.

“To overcome that hurdle,” the trial court said, “a decision was made to transfer title to the Dewey Court property to Christina alone, allowing Christina to show prospective rental income for the property and boosting their chance to qualify for an acceptable loan. Christina submitted a loan application showing the prospective rental income[]” from Dewey Court. It appears from the record that both Jerrold and Christina submitted the loan application.

On January 23, 2013, James and Christina executed two deeds. The first deed transferred ownership of the Dewey Court property from James and Christina as joint tenants to Christina as her sole property (“first January 23rd deed”). The deed contained the following language: “THIS DEED IS BEING RECORDED FOR LOAN PURPOSES ONLY[.] James is going back on title after close of escrow.” This deed was recorded.

By the second deed signed on January 23rd, Christina conveyed the Dewey Court property from herself back to James and herself (“second January 23rd deed”). This deed did not state the capacity in which the two owned the property; i.e., it did not state that the parties held their interests as joint tenants or in any other capacity. The deed contained the following language: “Father went off title for loan purposes, and now that the loan closed is going back on title. Father is retired and could not qualify for loan.” The second January 23rd deed was not recorded at that time.

Despite the ploy to make Christina appear to have more income, the potential lender ultimately denied the loan application, and Jerrold and Christina did not purchase the Yuba City property.

Later in 2013, Jerrold and Christina purchased a home in Sutter County as joint tenants. Jerrold, Christina, and James lived in that house.

On June 19, 2015, Christina died from complications from lupus. She died intestate. She did not have any children.

On August 10, 2015, approximately two months after Christina died, James recorded the second January 23rd deed that had been executed more than two years earlier to transfer the Dewey Court property back to him and Christina. Before recording the deed, he altered it by adding the words “joint tenant.” He also recorded an “Affidavit – Death of Joint Tenant,” in which he said Christina was a joint tenant on the deed.

From 2011 to the time of the trial, James paid the taxes, insurance, and homeowners’ association dues for the Dewey Court property. The total amount of these expenses exceeded $35,000. Jerrold never paid any of the taxes, insurance, or homeowners’ association dues.

Jerrold filed a complaint to quiet title to the Dewey Court property. He contended that under the first January 23rd deed, Dewey Court was community property, and as the surviving spouse, he was entitled to Christina’s interest. He asked the court to void the second January 23rd deed which James recorded on August 10, 2015. Doing so would leave Christina, and subsequently him, as the sole owner of the property at the time of Christina’s death under the terms of the first January 23rd deed. Jerrold named James and James’s ex-wife, respondent Jane S. Kishiyama, as defendants. (Jane died on September 25, 2018, and Dale Kishiyama, Special Administrator of Jane’s estate, has been substituted in as a party.)

James filed a cross-complaint against Jerrold and Jane. He alleged that Christina had intended to name herself and James as joint tenants of Dewey Court in the second January 23rd deed but did not do so due to mutual mistake. He asked the court to reform that deed to name them as joint tenants and to quiet title, thereby reacquiring his interest in the property and succeeding to Christina’s interest. After trial, he also sought pro-rata reimbursement for his payment of taxes, insurance, and homeowners’ association dues on Dewey Court.

Following a court trial, the trial court found that the second January 23rd deed was void. It was not legally delivered to James, as Christina did not intend for it to become operative immediately. Its effectiveness was based on a contingency—receipt of the loan—that never occurred. The deed was also void because James altered it after Christina executed it and before it was recorded.

Relying on the first January 23rd deed, the court found that Christina had held the Dewey Court property not as community property but as her separate property. Under the intestate succession statutes, Jerrold, as Christina’s surviving spouse, was entitled to one-half of Christina’s separate property. (Prob. Code, § 6401, subd. (c)(2)(B).) As Christina’s surviving parents, James and Jane were each entitled to one-quarter of the property. (Prob. Code, § 6402, subd. (b).)

The court also ruled that James was not entitled to be reimbursed his pro-rata share of the taxes, insurance, and homeowners’ association dues he had paid.

After judgment was entered, James filed a motion for new trial, which the court denied. He then filed this appeal.

DISCUSSION

I

Validity of the First January 23rd Deed

James raises a new theory on appeal. He contends the trial court erred when it voided the second January 23rd deed by not also voiding the first January 23rd deed. He asserts the trial court found that both deeds were executed as part of an illegal and fraudulent transaction to deceive the proposed lender into giving Christina and Jerrold a loan. Because the transaction’s purpose was unlawful, both deeds should have been declared void. Otherwise, Jerrold receives a windfall. Voiding the first deed would establish interests in the Dewey Court property as those set forth in the March 8, 2011, deed under which James and Christina owned the property as joint tenants.

Jerrold contends that James has forfeited this theory. He argues James is estopped from raising a new theory on appeal, and he forfeited the argument by not raising it in the trial court. Jerrold also claims we cannot review the new theory as a question of law on undisputed facts because it assumes facts that were not decided. Although the trial court referred to the scheme to defraud the lender as “a game of musical deeds,” it did not find that the scheme was illegal and fraudulent.

Responding to Jerrold, James argues he can raise the legality of a transaction at any time, including for the first time on appeal. He claims it was the trial court’s voiding the second January 23rd deed that raised the legality of the first January 23rd deed. He also claims the issue is one of law based on undisputed facts that may be addressed for the first time on appeal.

We will not consider James’s new theory on appeal. “ ‘Where the parties try the case on the assumption that . . . certain issues are raised by the pleadings, [or] that a particular issue is controlling, . . . neither party can change this theory for purposes of review on appeal. [¶] This doctrine of “theory on which the case was tried,” referred to more briefly as “theory of trial,” is a well-established rule of appellate practice.’ (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 407, pp. 466-467 [cases digested].) The doctrine is also applied where the parties assumed the applicability of a particular statute (id., § 412, p. 470), or where ‘the evidence offered and authorities submitted in a trial are directed solely to establishment of a particular legal relationship or legal doctrine of liability or defense’ (id., § 413, p. 470). To permit a change of position in the appeal ‘would, in most cases, be highly prejudicial and accordingly is not permitted.’ (Id., § 413, pp. 470-471; accord, North Coast Business Park v. Nielsen Construction Co. (1993) 17 Cal.App.4th 22, 29 [trial based on time of discovery of relevant defect for purposes of applying statute of limitation; on appeal from summary judgment for the defendant, the plaintiff was not permitted to change theory of the nature of defect involved to show statute of limitations had not run].)” (Sumner Hill Homeowners’ Assn., Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th 999, 1026-1027.)

James’s new theory is inconsistent with the theories on which the case was tried. Jerrold argued the second January 23rd deed was void, and he took title under the first January 23rd deed as community property. James argued he should take title under a reformulated second January 23rd deed. At no time did either party suggest the first January 23rd deed was void. To so completely change theories at this point would unduly prejudice Jerrold and Jane.

James could have raised his new argument to the trial court as part of requesting a statement of decision, but he did not. The trial court issued a written decision, wherein it found the second deed void and that Christina’s interest under the first deed was her separate property. James, with full knowledge of the court’s decision, requested a statement of decision. His request included a list of 35 questions. Only one mentioned the first deed. He asked the court whether the first and second deeds were deceptive to the proposed lender. The court stated that James’s 35 questions were an “evidentiary interrogation” that went far beyond what was required in a statement of decision. It believed its earlier decision fully covered the legal and factual issues in the case, and it reiterated it as a tentative decision. James then submitted nine proposals for the court to address in its final decision. In his proposals, James had the opportunity to ask the court to address the effect and viability of the first January 23rd deed, but he did not.

James also could have raised his new argument when he moved for a new trial, but he did not. Motions for new trial that may be brought on the ground the verdict is “against the law” “are not limited to those raised before verdict or judgment.” (Hoffman-Haag v. Transamerica Ins. Co. (1991) 1 Cal.App.4th 10, 15.) Nowhere in James’s new trial motion did he argue the first deed was void and he could receive Christina’s interest under the prior deed as joint tenants.

Not only did James not give the trial court and Jerrold an opportunity to address his argument, he raises it here with unclean hands. All three parties—Jerrold, Christina, and James—participated in the scheme to defraud the potential lender. Now James wants to avoid a consequence of his intentional participation and thereby receive sole title to the property. He argues the viability of the first deed was not an issue until the court voided the second deed, but the court voided the second deed in part because James altered it. James should not be allowed to argue that because his wrongful actions resulted in the court voiding the second deed, he can now take advantage of those actions to claim the first deed is also void and thereby receive sole title to the property. “No one can take advantage of his own wrong.” (Civ. Code, § 3517.)

Because the new theory comes to us with prejudice to the other parties and with unclean hands, we refuse to consider it.

II

Reimbursement of Expenses

The trial court denied James’s request to be reimbursed his pro-rata share of the property taxes, insurance, and homeowners’ association dues he paid on Dewey Court. “Any such payments,” the court wrote, “were voluntary on his part and made in furtherance of his fraudulent attempt to regain the property by altering the second deed. In equity, Jerrold and Jane should not be charged.”

James contends there is no legal basis to support “punishing” him and “granting Jerrold a windfall” by denying his request for reimbursement of taxes, insurance, and homeowners’ association dues. To the contrary, there is a legal basis. “The unclean hands doctrine has provided a defense in equitable proceedings for centuries.” (Schwing & Carr, California Affirmative Defenses (2d ed. 2019) § 45.4.) Given James’s actions, we cannot say the trial court abused its discretion when it denied his request for reimbursement based on unclean hands.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to respondents. (Cal. Rules of Court, rule 8.278(a).)

HULL, J.

We concur:

BLEASE, Acting P. J.

MURRAY, J.