Case Number: GC047367    Hearing Date: July 25, 2014    Dept: NCB

12. GC047367
TE CHUAN CHU v GUI YUN SUN et al
Motion for New Trial
Motion for Judgment Notwithstanding the Verdict

This case arises from the Plaintiff’s claim the Defendant prevented the Plaintiff from collecting a $190,000 loan by fraudulently transferring property on which Plaintiff had a deed of trust to avoid payment. The matter proceeded to a trial on April 7, 2014 and the jury returned a verdict in favor of the Plaintiff. The Plaintiff elected to take equitable and declaratory relief instead of legal damages. On June 4, 2014, the Court entered a judgment that:

1) the deed of trust at 401 Walnut Avenue, Arcadia, recorded on September 19, 2008 was set aside and declared null and void;
2) the deed of trust and trustee’s deed of sale for the real property at 401 Walnut Avenue, Arcadia, recorded on May 26, 2011 was set aside and declared null and void; and
3) the deed of trust recorded on January 18, 2008 for the benefit of the Plaintiff on the real property at 401 Walnut Avenue, Arcadia, was restored to the second lien position after the deed of trust in favor of East West Bank.

This hearing concerns the Defendant’s motion for a new trial or a judgment notwithstanding the verdict.

1. Motion for New Trial
Under CCP section 657, the grounds for new trial are the following:

1) Irregularity in the proceedings of the Court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial.
2) Jury misconduct
3) Accident or surprise, which ordinary prudence could not have guarded against.
4) Newly discovered evidence, material for the party making the application, which he could not, with reasonable diligence, have discovered and produced at the trial.
5) Excessive or inadequate damages.
6) Insufficiency of the evidence to justify the verdict or other decision, or the verdict or other decision is against law.
7) Error in law, occurring at the trial and excepted to by the party making the application.

A motion for new trial is a creature of statute and the Court may grant a new trial only by conforming to the statutory procedures. Sanchez-Corea v. Bank of America (1985) 38 Cal.3d 892, 899-900.

The Defendant argues that there are grounds for a new trial because there an insufficiency of evidence to support the verdict in favor of the Plaintiff and that there was an improper jury instruction. The Defendant’s motion is based on an argument that the Plaintiff was not owed $190,000 and that the Plaintiff had recovered the monies loaned.

a. Insufficiency of Evidence
When a trial court considers a motion for a new trial made upon the ground of insufficiency of the evidence, the judge is required to weigh the evidence and judge the credibility of witnesses. Dominguez v. Pantalone (1989) 212 Cal. App. 3d 201, 215-216. While it is the exclusive province of the jury to find the facts, it is the duty of the trial court to see that this function is intelligently and justly performed, and in the exercise of its supervisory power over the verdict, the court, on motion for a new trial, should consider the probative force of the evidence and satisfy itself that the evidence as a whole is sufficient to sustain the verdict. Id.

The Defendant argues that there was insufficient evidence because the jury should have found that the loan had been recovered.
The case arises from the Plaintiff’s claim that the Defendant hindered the Plaintiff’s ability to collect a promissory note on property at 410 Walnut Avenue, Arcadia, CA through a fraudulent transfer of property. The difficulty arises because the Plaintiff and Jing Gong used the 410 Walnut Avenue to secure two different promissory notes. The following discussion if based on the facts in the declaration of Plaintiff’s attorney, Fred Wong, regarding the Plaintiff’s testimony at trial.
The Plaintiff initially had made a private loan for $310,000 to Jing Gong. The loan was secured by a deed of trust on property at 401 Walnut Avenue, Arcadia, CA.
Jing Gong then requested that the deed of trust on the 401 Walnut Avenue property be reconveyed so that she could refinance the property. In return for the reconveyance, Jing Gong agreed to give two deeds of trust. The first was a deed of trust for $190,000 on the property at 401 Walnut Avenue that was recorded in the second lien position. The second was a $300,000 deed of trust on property at 11605 Garvey Avenue in El Monte, CA.
The $300,000 deed of trust on the 11605 Garvey Avenue property arose from the initial loan of $310,000 to Jing Gong. The $190,000 promissory note was based on a different source:

1) $140,000 that the Plaintiff believed was the value of a shortfall in the equity at the 11605 Garvey Avenue property; and
2) $50,000 that the Plaintiff had paid on behalf of Ai Ying to Mr. Chen.

The $190,000 promissory note was a separate promissory note that did not concern the original $310,000 private loan. The $190,000 promissory note was signed by Ai Ying.
The $300,000 promissory note on the 11605 Garvey Avenue property concerned the original $310,000 private loan. The Plaintiff obtained a recovery on the $300,000 promissory note when the Plaintiff foreclosed on the 11605 Garvey Avenue property.
However, the recovery of the $300,000 promissory note was not a recovery of the $190,000 promissory note because the $190,000 promissory note was based on a separate debt, i.e., the $140,000 shortfall in equity plus a $50,000 debt arising from a payment on behalf of Ai Ying to Mr. Chen. Since the debts in the $190,000 promissory had not been recovered from the foreclosure on the Garvey property, there was sufficient evidence to support the jury’s finding.

The Defendant’s analysis of the loans is incorrect. The $190,000 loan secured by a deed of trust on the 401 Walnut property was not based on the original $310,000 private loan. Instead, $190,000 promissory note was based on separate debts: 1) a $140,000 shortfall in equity and 2) the $50,000 separate debt.
The Defendant also argues that there was no consideration for the $190,000 promissory note because the Plaintiff did not pay $190,000 to anyone. However, the $190,000 was not based on a loan for $190,000. Instead, as discussed above, the $190,000 promissory note was based on a $140,000 shortfall in equity on the Garvey property and $50,000 that the Plaintiff had paid on behalf of Ai Ying to Mr. Chen.

The fraudulent transfer claim against the Defendant, Gui Sun, arose because the Plaintiff discovered that the Plaintiff’s deed of trust on the 401 Walnut Avenue property was not in the second lien position, but in the third lien position, junior to a bank lien and Gui Sun’s deed of trust. When Gui Sun foreclosed on her trust deed on the 401 Walnut Avenue property, it resulted in the Plaintiff losing his deed of trust.
The jury found that Jing Gong or Ai Gong had given a trust deed to Gui Sun on the 401 Walnut Avenue property with the intent to hinder or defraud creditors (Combined Special Verdict Form, page 3, question 10). The jury found that Gui Sun had received this trust deed without transferring reasonably equivalent value (Combined Special Verdict Form, page 3, question 12). Based on this finding that Gui Sun’s deed of trust was the result of a fraudulent transfer intended to defraud a creditor, the judgment set aside and declared void Gui Sun’s deed of trust and placed the Plaintiff’s deed of trust in the second lien position on the 401 Walnut Avenue property.

This analysis reveals that there was sufficient evidence to support the jury’s finding that the Plaintiff had not recovered the $190,000 promissory. Therefore, there are no grounds for a new trial based on the insufficiency of evidence.

b. Error at Law
The Defendant argues that there was an error at law because the Court gave an incorrect jury instruction regarding the fraudulent conveyance. The Court cannot grant a new trial on an error in law unless the Court makes a determination that the error caused prejudice and that a new trial is warranted. People v. Ault (2004) 33 Cal. 4th 1250, 1271-1272 (holding that a trial court may order a new trial only if it makes a determination that there was prejudice). Prejudice from an erroneous instruction is never presumed; it must be affirmatively demonstrated by the appellant. Wilkinson v. Bay Shore Lumber Co. (1986) 182 Cal. App. 3d 594, 599-600.
The Defendant argues that prejudice occurred because there was no obligation owed to the Plaintiff. This argument is based on the theory that the $190,000 promissory note was recovered when the Plaintiff foreclosed on the property at 11605 Garvey Avenue. As discussed above, this argument is incorrect because the $190,000 promissory note arose from a separate debt, i.e., $140,000 for a shortfall in equity and $50,000 for a payment to Mr. Chen on behalf of Ai Ying. Since $190,000 was not recovered by the foreclosure, there was an obligation due to the Plaintiff. Accordingly, there was no error at law because the jury instruction was not in error.

Therefore, there are no grounds for a new trial based on the jury instructions.

Accordingly, the Court denies the Defendant’s motion for a new trial.

2. Motion for Judgment Notwithstanding the Verdict
Under CCP section 629 the Court may render a judgment in favor of the aggrieved party notwithstanding the verdict whenever a motion for a directed verdict for the aggrieved party should have been granted had a previous motion been made. A directed verdict is made under CCP section 630 and is granted if there is no evidence of sufficient substantiality to support the claim or defense of the party opposing the motion.

The Defendant argues that there is no evidence to support the Plaintiff’s claim that the Plaintiff can recover on the $190,000 promissory note. The Defendant’s arguments are the same arguments in support of the motion for new trial, i.e., the Plaintiff recovered this debt when the Plaintiff foreclosed on the Garvey property and there is no consideration for the $190,000 note. As concluded in the analysis of these arguments in the above section regarding the Defendant’s motion for a new trial, the $190,000 promissory note arose from a source different from the $310,000 loan, i.e., the $190,000 promissory note was based on a $140,000 shortfall in equity and a $50,000 debt paid to Mr. Chen on behalf of Ai Ying. Since the $190,000 promissory note arose from a different source, the Plaintiff’s foreclosure on the Garvey property did not act as a recovery on it. Accordingly, there is evidence that the Plaintiff may recover on the $190,000 promissory note.

Therefore, the Court denies the Defendant’s motion for a judgment notwithstanding the verdict.