Hwang v. Shah CA1/4
A160309
| Cal. Ct. App. | May 13, 2021Background
- In 2009 Jay Shah stole title to three condominiums and fraudulently obtained mortgages; he used much of the proceeds to acquire Quimby Ranch in Santa Clara County.
- Jay later transferred title to the Quimby Ranch to his parents, C.K. and Mrudula Shah; a 2010 injunction prohibited transfers of the ranch and related property pending prosecution.
- In 2013 Jay Shah was convicted; in 2015 the court ordered victim restitution to Shirley Hwang ($311,767.05) and Hwang later obtained a civil judgment against Jay (multimillion dollars).
- In 2013 C.K. and Mrudula recorded five trust deeds naming Jay as beneficiary securing $7.25 million; in 2016 they recorded reconveyances purporting to cancel those trust deeds.
- Hwang sought enforcement of the restitution/judgment, examined C.K. under CCP §708.120, then moved under §708.180 to have the court determine that C.K. owed a $7.25 million debt to Jay; the trial court found C.K.’s denial not made in good faith, ruled the debt existed, and found the reconveyances violated the UVTA.
- C.K. appealed; the Court of Appeal affirmed the §708.180 determination, rejecting challenges to the good-faith finding, the court’s use of recorded recitals, due process, and UVTA-related arguments.
Issues
| Issue | Hwang's Argument | C.K. Shah's Argument | Held |
|---|---|---|---|
| Whether C.K.’s denial of owing Jay $7.25M was made in good faith under CCP §708.180 | The recorded trust deeds create a prima facie debt; C.K. failed to prove by preponderance that his denial was honest | The deeds were a mistaken estate‑planning device and later reconveyances show he never owed a debt | Substantial evidence supports the trial court’s credibility findings; denial was not in good faith and court properly determined the debt exists |
| Whether the court improperly accepted deed recitals as conclusive without crediting C.K.’s testimony | The recorded instruments’ recitals suffice to make a prima facie showing; the court may assess credibility of contrary testimony | The court relied on recitals as conclusive and ignored rebutting testimony and missing promissory note | Court considered C.K.’s testimony, found it not credible; prima facie burden is low and the third party must prove good faith by preponderance |
| Whether reconveyances extinguished the debt or the court improperly violated UVTA by nullifying them | Hwang need not void reconveyances to obtain relief; court may determine existence of underlying debt and apply it to satisfy judgment | Reconveyances cleared title and demonstrate the debt was not outstanding; court’s order effectively voids them and violates UVTA/due process | Reconveyances clear record title only and did not necessarily extinguish the debt; the court did not void reconveyances and did not violate UVTA or due process in using §708.180 summary procedure |
| Whether the court lacked authority to enter judgment against a nonparty or otherwise exceed authority | Hwang sought application of a third‑party debt to satisfy judgment; court may create a lien under §708.205 if denial not in good faith | Court improperly declared intent to enter judgment against C.K., a nonparty to the original restitution order | Court observed no final judgment has yet been entered; it affirmed the §708.180 determination and declined to rule on any future judgment merits or advisory relief |
Key Cases Cited
- Evans v. Paye, 32 Cal.App.4th 265 (1995) (explains §708.120–.180 procedure and that third person must prove denial of debt was made in good faith by preponderance)
- Snider v. Basinger, 61 Cal.App.3d 819 (1976) (reconveyance clears record title but does not itself extinguish underlying obligation)
- American Indian Model Schools v. Oakland Unified School Dist., 227 Cal.App.4th 258 (2014) (untimely appellate arguments not raised below may be forfeited)