2014-00166580-CU-BC

Dale M. Wallis vs. PHL Associates, Inc.

Nature of Proceeding: Motion for Judgment on the Pleadings

Filed By: Griffin, Tory E.

Defendant PHL Associates, Inc.’s (PHL) motion for judgment on the pleadings is GRANTED without leave amend.

Trial is set to commence on 5/14/18, and trial was originally set for 7/31/17. Under CCP § 438(e), motions for judgment on the pleadings generally must be made no later than 30 days before the original trial date. PHL argues the motion is timely nonetheless because it is a common law motion for judgment on the pleadings, not a statutory motion under § 438. Even if it were a statutory motion, the court would entertain it in its discretion. (See CCP § 438(e).)

PHL’s counsel did not meet and confer prior to filing the motion, as now required under CCP § 439. Nonetheless, counsel have since met and conferred, (see Griffin Reply

Decl., ¶¶ 2-3 and Exh. A), and Plaintiff Dale M. Wallis (Dr. Wallis) has filed a substantive opposition. Under these circumstances, it is unnecessary to deny the motion without prejudice or continue the hearing to allow counsel to meet and confer further. Future failures to comply with procedural statues, however, could result in adverse rulings.

PHL’s request for judicial notice of a minute order in this case is GRANTED.

Dr. Wallis’ request for judicial notice of court records is GRANTED as well.

Overview

Dr. Wallis commenced this case in 2014. In her complaint, she alleges that PHL received a fraudulent conveyance of stock from one of its shareholders, Thomas V. Hanzo (Hanzo). Hanzo died in January 2004. Before Hanzo died, he, Dr. Wallis and PHL were involved in another lawsuit in which Dr. Wallis sued for misuse of an invention. While that lawsuit was underway, PHL allegedly repurchased Hanzo’s PHL stock in exchange for $600,000 and other consideration. Dr. Wallis alleges in the current case that this repurchase effectively rendered Hanzo judgment proof and thwarted her attempts to collect on the money judgment against him. Dr. Wallis’ eighth cause of action in this case predicates liability on PHL’s participation in a fraudulent conveyance.

PHL now moves for judgment on the pleadings as to the eight cause of action. Citing PGA West Residential Association, Inc. v. Hulven International, Inc. [PGA West] (2017) 14 Cal.App.5th 156, PHL argues the eight cause of action is time-barred. Dr. Wallis opposes.

PHL previously challenged the eighth cause of action on demurrer, including on grounds the cause of action was time-barred. The court sustained the demurrer to the extent the eight cause of action was brought under the Uniform Fraudulent Transfers Act (UFTA), CC §§ 3439 et seq. (In 2015, the UFTA was revised and renamed the Uniform Void Transactions Act (UVTA).) The demurrer was otherwise overruled, however, because the eighth cause of action can be construed to present a common law claim of fraudulent conveyance. PGA West was decided after the court ruled on the demurrer.

Discussion

CC § 3439.09(c) is within the UFTA and reads:

Notwithstanding any other provision of law, a cause of action under this chapter with respect to a transfer or obligation is extinguished if no action is brought or levy made within seven years after the transfer was made or the obligation was incurred. (Emphasis added.)

In PGA West, the Court of Appeal held that any transfer within the purview of the UFTA is subject to the seven-year statute in § 3439.09(c), including transfers assailed on a common law theory. (See PGA West, pp. 163, 170-171; see also id., p. 183 [“The legislative history to section 3439.09 supports our conclusion that the seven-year limitation under section 3439.09(c) was intended as an absolute limit on actions to challenge fraudulent transfers that cannot be tolled or otherwise excluded”].) In

addition, the court noted that “‘the UFTA applies to all transfers.'” (Id., p. 169, citation omitted.) Hence, the transfer of stock alleged in Dr. Wallis’ complaint is a transfer within the UFTA. (See CC § 3439.01(m) [“’Transfer’ means every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or interest in an asset… .”; id. § 3439.01(a) [“’Asset’ means property of a debtor…”].) Given PGA West, PHL’s motion is meritorious.

All of Dr. Wallis’ arguments in opposition lack merit. To the extent Dr. Wallis argues PGA West contains flawed reasoning, suffice it to say that this court of inferior jurisdiction is bound to follow it nonetheless.

Recent amendments to the UFTA do not alter the outcome either. (See Opp. at 6.) PGA West was decided after the amendments took effect, yet the court in that case noted that differences between the former and current versions of § 3439.09 are not “substantive.” (See PGA West, p. 162, fn. 2.) In fact, the PGA West court reached its conclusion based on the amended language, which Dr. Wallis argues is more favorable to her than the pre-amendment language. In addition, the Legislature advised that provisions in the new UVTA that are “substantially the same” as the old provisions in the UFTA “shall be construed as restatements and continuations, and not as new enactments.” (CC § 3439.14(d).) The fact that § 3439.09(c) now refers to causes of action “under this chapter,” as opposed to causes of action without limitation, does not render PGA West inapplicable to this case.

In short, PGA West compels a conclusion that Dr. Wallis’ eighth cause of action, which is predicated on a transfer of stock in 2003, is time-barred. Dr. Wallis has failed to demonstrate any likelihood she can sure the cause of action through amendment. As a result, the motion is granted without leave to amend.