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Warning: The following opinion is provided for purposes of discussion only. We have not Shepardized™ this opinion, and do not know the subsequent disposition of this case nor whether the effect of the opinion has been overruled or superceded by other law. Karen Wisden v. The Superior Court of Los Angeles County,124 Cal. App. 4th 750 (Cal.App. 12/03/2004) B175136 COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, 124 Cal. App. 4th 750;21 Cal. Rptr. 3d 523;2004 Cal. App. LEXIS 2054; December 3, 2004, Filed PRIOR HISTORY: [*1] ORIGINAL PROCEEDING in mandate. Superior Court of Los Angeles County, No. BC272244. Robert L. Hess, Judge. DISPOSITION: Petition for writ of mandate granted. COUNSEL: Andrews & Hensleigh, Joseph Andrews and John Aumer for Petitioner. No appearance for Respondent. Katten Muchin Zavis Rosenman, Charles M. Stern and Rania Khamis for Real Parties in Interest American Housing Corporation and John Sims. Keats, McFarland & Wilson and Emil W. Herich for Real Party in Interest Michael Heaman. JUDGES: Boland, J., with Cooper, P. J., and Rubin, J., concurring. OPINIONBY: BOLAND OPINION: BOLAND, J.-- SUMMARY Plaintiff Karen Wisden seeks writ relief after the trial court denied her request for a jury trial on a cause of action for fraudulent conveyance. We conclude the trial court erred when it denied Wisden's request. Accordingly, we grant the petition. FACTUAL AND PROCEDURAL HISTORY Karen Wisden filed an action against American Housing Corporation (AHC) and two of its officers, John Sims and Michael Heaman, seeking to enforce an unpaid judgment entered against AHC. The complaint alleged that in a prior action brought by Wisden against AHC, the parties entered into a stipulated judgment for $ 75,000 in favor [*2] of Wisden and against AHC. According to the complaint, no money was paid in satisfaction of the judgment. The complaint further alleged Sims and Heaman testified during judgment debtor examinations that AHC was without assets and was insolvent. The complaint asserted four causes of action, including a cause of action for fraudulent conveyance. In that cause of action, Wisden sought to set aside, to the extent necessary to satisfy her judgment against AHC, allegedly fraudulent transfers of funds totaling more than $ 1.5 million from AHC to Sims and Heaman. She also sought to enjoin further disposition or dissipation of the funds obtained through the fraudulent transfers, imposition of a constructive trust on assets obtained through the use of those funds, and punitive damages. Wisden requested a jury trial. The trial court issued an order to show cause, requesting briefing on Wisden's entitlement to a jury trial on any of the causes of action asserted in her complaint. In support of her contention that she had a right to a jury trial on the fraudulent conveyance claim, n1 Wisden cited Granfinanciera, S.A. v. Nordberg (1989) 492 U.S. 33 [106 L. Ed. 2d 26, 109 S. Ct. 2782] [*3] (Granfinanciera), where the Supreme Court held that persons sued by a bankruptcy trustee to recover allegedly fraudulent conveyances of money were entitled to a jury trial. Wisden also cited Code of Civil Procedure section 592 in support of her contention. n2 - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*4] In response, AHC and Sims claimed the fraudulent conveyance cause of action "invokes the provisions of California's Uniform Fraudulent Transfer Act ('UFTA')" and, under that act, no right to a jury trial is afforded. AHC and Sims sought to distinguish Granfinanciera on the grounds that the case involved the Seventh Amendment to the United States Constitution and a claim by a bankruptcy trustee to recover improper transfers, not a claim by a judgment creditor seeking to set aside a fraudulent transfer. AHC and Sims also claimed Code of Civil Procedure section 592 was inapplicable because Wisden was not seeking to recover "specific, real, or personal property." In a separate response, Heaman also argued Wisden was not entitled to a jury trial on the fraudulent conveyance claim. Agreeing with the defendants, the trial court ruled Wisden was not entitled to a jury trial. It noted a "long line of federal authority" holding that claims under the UFTA and its predecessor statute are equitable in nature and do not involve a right to a jury trial. While acknowledging Wisden's assertion that her cause of action was a common law claim, the court held the cause [*5] of action was equitable in nature. It did not expressly address Wisden's contention that she had a right to jury trial under Code of Civil Procedure section 592. n3 - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - Wisden filed a writ petition challenging the trial court's ruling that she had no right to a jury trial. This court issued an alternative writ, received briefing and heard oral argument. DISCUSSION We conclude Wisden is entitled to a trial by jury on her cause of action for fraudulent conveyance. We first describe the legal principles which control our analysis, then apply those principles to this case, and finally address arguments raised by the real parties in interest. 1. The governing legal principles. (1) The California Supreme Court has described, on numerous occasions, the principles under which we determine whether a right to jury trial exists under the California [*6] Constitution (art. I, § 16). The rule is simple. If the right to trial by jury existed at common law in 1850, when the California Constitution was adopted, it exists today: "It is the right to trial by jury as it existed at common law which is preserved; and what that right is, is a purely historical question, a fact which is to be ascertained like any other social, political or legal fact." ( People v. One 1941 Chevrolet Coupe (1951) 37 Cal.2d 283, 287 [231 P.2d 832] [right to trial by jury in forfeiture proceeding].) n4 (2) The Court has expressly cautioned that the right to a trial by jury "cannot be avoided by merely calling an action a special proceeding or equitable in nature." ( People v. One 1941 Chevrolet Coupe, supra, 37 Cal.2d at p. 299.) The constitutional right to a jury trial "does not permit the Legislature to confer on the courts the power of trying according to the course of chancery any question which has always been triable according to the course of the common law by a jury." (Ibid.) In other words, the Legislature cannot, "by providing new remedies ... in form equitable," convert a legal right "into an equitable one so as to infringe [*7] upon the right of trial by jury." (Ibid., fn. omitted.) (3) Thus,"In determining whether the action was one triable by a jury at common law, the court is not bound by the form of the action but rather by the nature of the rights involved and the facts of the particular case--the gist of the action. A jury trial must be granted where the gist of the action is legal, where the action is in reality cognizable at law." (Ibid.) "On the other hand, if the action is essentially one in equity and the relief sought 'depends upon the application of equitable doctrines,' the parties are not entitled to a jury trial." ( C & K Engineering Contractors v. Amber Steel Co., supra, 23 Cal.3d at p. 9 (C & K Engineering), quoting Hartman v. Burford (1966) 242 Cal. App. 2d 268, 270 [51 Cal. Rptr. 309] [enforcement of a promise to make a will].) While the legal or equitable nature of a cause of action is ordinarily determined by the mode of relief afforded, "the prayer for relief in a particular case is not conclusive ... ." ( C & K Engineering, supra, 23 Cal.3d at p. 9.) - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*8] 2. Wisden's action for fraudulent conveyance. Consonant with these well-settled principles, we look first to the historical question whether an action to recover fraudulent conveyances was triable by a jury at common law in 1850. We need not look far, because the United States Supreme Court had occasion to assess this very question in Granfinanciera, supra, 492 U.S. 33. In Granfinanciera, the Court concluded the respondent in that case, a trustee in bankruptcy, "would have had to bring his action to recover an alleged fraudulent conveyance of a determinate sum of money at law in 18th-century England, and ... a court of equity would not have adjudicated it." ( Granfinanciera, supra, 492 U.S. at pp. 46-47, fn. omitted.) The Court's recitation of the historical facts is supported with extensive citations to the historical record and legal authorities. ( Id. at pp. 43-47.) The Court observes, for example, that: " 'In England, long prior to the enactment of our first Judiciary Act, common law actions of trover and money had and received were resorted to for the recovery of preferential payments by bankrupts.' " ( Id. at p. 43, [*9] quoting Schoenthal v. Irving Trust Co. (1932) 287 U.S. 92, 94 [77 L. Ed. 185, 53 S. Ct. 50], fn. omitted, and citing numerous English cases.) While the Court acknowledged that "courts of equity sometimes provided relief in fraudulent conveyance actions" ( Granfinanciera, supra, 492 U.S. at p. 43), it concluded that fraudulent transfers of money were not "typically or indeed ever entertained by English courts of equity when the Seventh Amendment was adopted" in 1791. ( Id. at p. 44 [citing scholarly authority to the effect that if the fraudulent transfer were of cash, the action would be for money had and received, whereas the equitable process could be invoked if the subject matter were land or an intangible].) Granfinanciera concluded that the fraudulent conveyance action in that case--which sought monetary relief and disclosed no facts calling for an accounting or other equitable relief--"plainly seeks relief traditionally provided by law courts or on the law side of courts having both legal and equitable dockets." n5 ( Id. at p. 49, fn. omitted.) - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*10] (4) Based upon the historical analysis in Granfinanciera, it appears beyond debate that, in 1791, the right to trial by jury existed at common law in an action to recover an alleged fraudulent conveyance of a determinate sum of money. Moreover, none of the real parties in interest has adduced any authority suggesting that any change occurred in the common law between 1791 (the relevant date for Granfinanciera's Seventh Amendment analysis) and 1850 (the relevant date for analysis under the California Constitution). n6 We must necessarily conclude, consonant with California Supreme Court authority, that the same right to trial by jury in an action to recover a fraudulent conveyance of a determinate sum of money exists today. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*11] 3. Contentions of the real parties in interest. Real parties in interest fail to acknowledge the settled principles under which the existence vel non of a right to jury trial under the California Constitution is to be determined--that is, the right is "a purely historical question, a fact which is to be ascertained like any other social, political or legal fact." ( People v. One 1941 Chevrolet Coupe, supra, 37 Cal.2d at p. 287; accord, Crouchman v. Superior Court, supra, 45 Cal.3d at p. 1173; C & K Engineering Contractors v. Amber Steel Co., supra, 23 Cal.3d at p. 8.) The absence of the necessary historical analysis is telling. Instead, AHC and Sims make several different assertions, all of which lack merit. (5) First, AHC and Sims assert that analysis of a plaintiff's right to a jury trial "must begin with a review of the pleadings," which in this case do not use the word "damages," and that no right to jury trial exists when the remedies invoked in the pleadings "are equitable in nature ... ." We cannot agree, either with real parties' interpretation of Wisden's complaint or with the proposition that analysis begins [*12] with a review of the complaint. Analysis begins, as the California Supreme Court has instructed, with the historical analysis, not with the pleadings; "the court is not bound by the form of the action but rather by the nature of the rights involved and the facts of the particular case ... ." ( People v. One 1941 Chevrolet Coupe, supra, 37 Cal.2d at p. 299.) In addition, "the prayer for relief in a particular case is not conclusive ... ." ( C & K Engineering, supra, 23 Cal.3d at p. 9.) In any event, Wisden's complaint seeks monetary relief. It explicitly requests "avoidance of the fraudulent transfers to the extent necessary to satisfy [her] existing judgment against" AHC, as well as punitive damages. The "mode of relief to be afforded" is necessarily monetary relief, and it does not depend upon the application of equitable doctrines. (See C & K Engineering, supra, 23 Cal.3d at p. 9 [151 Cal.Rptr. 323, 587 P.2d 1136] [legal or equitable nature of a cause of action is ordinarily determined by the mode of relief to be afforded]; see also Granfinanciera, supra, 492 U.S. at p. 49, fn. 7 ["any distinction that might exist between 'damages' and monetary [*13] relief under a different label is purely semantic, with no relevance to the adjudication of petitioners' Seventh Amendment claim"].) In short, even assuming we could ignore the historical record showing the right to jury trial in a fraudulent conveyance action existed at English common law, we discern no basis for the assertion that Wisden's fraudulent conveyance action sought exclusively, or even "essentially," equitable remedies. (6) Second, AHC and Sims contend that the UFTA, which has no provision for jury trial, supersedes the common law of fraudulent transfers in California. They are mistaken. "[T]he remedies of the UFTA and its predecessor ... are cumulative to the remedies applicable to fraudulent conveyances that existed before the uniform laws went into effect." ( Cortez v. Vogt (1997) 52 Cal.App.4th 917, 929 [60 Cal. Rptr. 2d 841]; see also Macedo v. Bosio (2001) 86 Cal.App.4th 1044, 1051 [104 Cal. Rptr. 2d 1] ["the UFTA is not the exclusive remedy by which fraudulent conveyances and transfers may be attacked"; they "may also be attacked by, as it were, a common law action"].) Moreover, even if the Legislature intended that all fraudulent conveyance claims be brought under the UFTA, [*14] the Legislature could not thereby dispense with a right to jury trial that existed at common law when the California Constitution was adopted. ( People v. One 1941 Chevrolet Coupe, supra, 37 Cal.2d at p. 299, fn. omitted ["[t]he Legislature cannot convert a legal right into an equitable one so as to infringe upon the right of trial by jury"].) Third, AHC and Sims argue that any claim asserting a fraudulent transfer, whether based on the statute or common law, is "equitable in nature" and therefore no right to jury trial exists. Again, real parties avoid reference to the historical record, which is plainly to the contrary. ( Granfinanciera, supra, 492 U.S. at pp. 43-47.) They also ignore the express stricture of the California Supreme Court, which advises that the right to trial by jury cannot be avoided "by merely calling an action ... equitable in nature." ( People v. One 1941 Chevrolet Coupe, supra, 37 Cal.2d at p. 299.) n7 - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [*15] Fourth, AHC and Sims argue Granfinanciera is irrelevant, because the Seventh Amendment applies only in federal courts and the right to jury trial at issue in this case is a matter of state law. While the latter proposition is correct, the former is not. The relevance of Granfinanciera lies not in its holding under the Seventh Amendment, but in its recitation of the historical facts establishing that an action to recover fraudulent conveyances of a determinate sum of money was triable by a jury at common law in late 18th-century England. Finally, AHC and Sims assert that Granfinanciera is distinguishable because it involved fraudulent transfer claims by a bankruptcy trustee, rather than by a judgment creditor. According to real parties, the "remedies sought by a judgment creditor attempting to collect on an unsatisfied money judgment have traditionally been deemed available by an equitable action, or, more precisely, a bill in equity." This assertion is, once again, inapt. n8 Certainly a judgment creditor may bring a creditor's bill in equity. Indeed, Wisden did so in her second cause of action, and she is not entitled to (and does not seek) a jury trial on that cause. [*16] The question is whether she is entitled to a jury trial on her fraudulent conveyance claim. The suggestion that Granfinanciera's historical analysis of common law actions to recover fraudulent conveyances does not apply to judgment creditors, but only to bankruptcy trustees, is demonstrably without merit. The English cases described in Granfinanciera involve suits by creditors as well as by assignees in bankruptcy. n9 ( Granfinanciera, supra, 492 U.S. at pp. 44-45.) Indeed, prior to the passage of the UFTA and its predecessor statute, it was necessary for a creditor to obtain a judgment, or a specific lien on property, before an action could be brought to set aside a fraudulent conveyance. ( Cortez v. Vogt, supra, 52 Cal.App.4th at p. 930 & fn. 12.) Accordingly, the notion that Granfinanciera's analysis of fraudulent conveyance actions did not include or apply to actions by judgment creditors is necessarily and patently wrong. - - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - In sum, it is beyond question that an action to recover a fraudulent conveyance of a determinate sum of money was triable by a jury at common law in England in 1791. No evidence has been adduced that any change in English common law occurred between 1791 and 1850. Consequently, the California Constitution guarantees the right to jury trial in a similar action today. DISPOSITION The petition for writ of mandate is granted. The respondent court is directed to vacate [*18] its order of August 29, 2003, which concluded that petitioner was not entitled to a jury trial on her fraudulent conveyance claim. Petitioner is entitled to her costs in this writ proceeding. (Cal. Rules of Court, rule 56.4.) Cooper, P. J., and Rubin, J., concurred. The legal opinions are a matter of public record (that's how we got them), and as such there can be no defamation for republishing them. Sometimes, however, legal opinions are reversed, vacated, or significantly modified, etc., and we do not discover this fact until somebody points it out to us. As we do not desire to publish inaccurate or outdated information, if a legal opinion has been reversed, vacated, or significantly modified, please advise us of this fact immediately, by fax to (877) 698-0678 or you may also send regular postal correspondence to Adkisson Publishing, Inc., at P.O. Box 7088, Laguna Niguel, CA 92677. |
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