Pga W. Residential Ass'n, Inc. v. Hulven Int'l, Inc.
14 Cal. App. 5th 156
Cal. Ct. App. 5th2017Background
- In 2004 Dempsey Mork recorded a deed of trust naming Hulven (a sham corporation he later incorporated) as beneficiary, secured by a fake note; Mork never paid and received no consideration.
- Hulven was created after the deed, was wholly controlled by Mork, and later involuntarily dissolved; a trustee substitution and nonjudicial foreclosure activity occurred years later.
- PGA West obtained a money judgment against Mork in 2011 and recorded judgment liens; PGA West sued Hulven in 2013 seeking declaratory and injunctive relief, alleging the deed/foreclosure were fraudulent attempts to defeat creditors.
- Hulven demurred, arguing the UFTA seven‑year limitation (§ 3439.09(c)) extinguished any claim because PGA West sued more than seven years after the 2004 deed; the trial court overruled the demurrer, and after a bench trial declared the deed void.
- On appeal the court considered (1) whether the deed to a sham entity is a "transfer" under the UFTA and (2) whether § 3439.09(c) is a statute of repose (thus not forfeitable or tollable), and concluded PGA West’s claims were time‑barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether naming a sham corporation as deed beneficiary is a "transfer" under the UFTA | PGA West: no real transfer occurred because Hulven never truly existed and no obligation was incurred | Hulven: deed to sham entity is a transfer under UFTA | Held: Yes — transfer includes dispositions to sham entities; deed constituted a transfer under Civ. Code §3439.01(m) and §3439.04 |
| Whether §3439.09(c) is a statute of limitations or a statute of repose | PGA West: it's a procedural statute of limitations, subject to tolling and forfeiture | Hulven: it is an absolute seven‑year statute of repose that extinguishes the right | Held: §3439.09(c) is a statute of repose that extinguishes the substantive right and is not subject to tolling |
| Whether a statute of repose defense can be forfeited by a defendant’s failure to press it at trial | PGA West: Hulven forfeited the defense by not rearguing it at trial | Hulven: preserved the defense via demurrer and appeal | Held: Statute of repose cannot be forfeited; defense need not be repeatedly reasserted; repose bars the action regardless |
| Whether PGA West’s suit was timely and judgment should stand | PGA West: suit concerns priorities and foreclosure acts (not time‑barred); relief requested was equitable | Hulven: the 2004 deed triggered the 7‑year repose; suit filed in 2013 was too late | Held: PGA West sued in 2013, more than seven years after the 2004 deed; claims were extinguished and the court erred in overruling the demurrer — judgment reversed and demurrer to be sustained without leave to amend |
Key Cases Cited
- Mejia v. Reed, 31 Cal.4th 657 (2003) (describing UFTA scope and fraudulent transfer standards)
- Macedo v. Bosio, 86 Cal.App.4th 1044 (2001) (UFTA supplements common law and §3439.09(c) provides an overarching maximum period)
- Cortez v. Vogt, 52 Cal.App.4th 917 (1997) (tolling under some UFTA provisions until underlying liability is final)
- Roskam Baking Co. v. Lanham Mach. Co., 288 F.3d 895 (6th Cir. 2002) (statutes of repose extinguish rights and are not affirmative defenses subject to waiver)
- CTS Corp. v. Waldburger, 573 U.S. 1 (2014) (distinction between statutes of limitations and statutes of repose; repose gives defendants certainty)
- California Public Employees' Retirement System v. ANZ Securities, 137 S. Ct. 2042 (2017) (statutes of repose measured from defendant's last culpable act and not subject to tolling)