PGA West Residential Assn. v. Hulven International, E064270

Background

In 2004 Dempsey Mork recorded a deed of trust naming Hulven International, Inc. (a shell entity wholly controlled by Mork) as beneficiary, securing a fictitious $450,000 note; no consideration passed and Hulven did not enforce the note within the applicable limitations window.
PGA West obtained a money judgment against Mork in 2011 and recorded an abstract of judgment, creating a judgment lien on the condominium.
In 2012–2013 purported foreclosure steps (substitution of trustee, notice of default, notice of sale) were recorded in Hulven’s name; PGA West sued in March 2013 seeking declaratory and equitable relief, alleging the deed and foreclosure were fraudulent devices to defeat creditors.
Hulven demurred, arguing the Uniform Fraudulent Transfer Act (UFTA) seven-year limitation (§ 3439.09(c)) extinguished PGA West’s right to attack the 2004 deed; the trial court overruled the demurrer, issued injunctive relief, and later entered judgment for PGA West cancelling the deed.
On appeal the court considered (1) whether the 2004 deed of trust constituted a “transfer” under the UFTA when made to a sham entity, and (2) whether § 3439.09(c) is a statute of repose (non-forfeitable) that barred PGA West’s suit filed more than seven years after the deed.

Issues

Issue	Plaintiff's Argument (PGA West)	Defendant's Argument (Hulven)	Held
Whether the 2004 deed of trust was a “transfer” under the UFTA	The deed and note were fictitious; Hulven never existed and thus there was no transfer to a transferee covered by the UFTA	The deed of trust was a transfer of an interest in the asset (equity in the condo) to a sham transferee, so the UFTA applies	The deed to a sham entity is a "transfer" under the UFTA and the UFTA applies
Whether § 3439.09(c)’s seven-year limit is a statute of repose or a procedural statute of limitations	The seven-year rule is a limitations period that can be forfeited or tolled; Hulven forfeited it by not rearguing at trial	§ 3439.09(c) is a substantive statute of repose that extinguishes the right and cannot be forfeited or tolled	§ 3439.09(c) is a statute of repose that extinguishes the right to attack the transfer after seven years and is not subject to forfeiture or tolling
Whether PGA West’s complaint (filed March 2013) was timely as an attack on the deed of trust	The complaint sought declaratory relief about lien priority and challenged only the foreclosure, not an already-completed transfer	The gravamen of PGA West’s claims was an attack on the 2004 transfer; therefore the seven-year bar applies	PGA West’s claims were substantively an attack on the 2004 transfer and were time-barred under § 3439.09(c)
Whether Hulven forfeited the § 3439.09(c) defense by failing to press it at trial	Even if not reargued at trial, the defense was preserved; alternatively, it was forfeited	A statute of repose cannot be forfeited; the defense need not be re-urged at trial	The court adopted the majority view: statutes of repose cannot be forfeited, so the defense stood despite not being reargued at trial

Key Cases Cited

Mejia v. Reed, 31 Cal.4th 657 (Cal. 2003) (UFTA applies to transfers that impede creditors; broad definition of "transfer")
Macedo v. Bosio, 86 Cal.App.4th 1044 (Cal. Ct. App. 2001) (UFTA supplements common-law remedies; seven-year cap is overarching maximum)
CTS Corp. v. Waldburger, 573 U.S. 1 (U.S. 2014) (distinction between statutes of limitations and statutes of repose; repose grants defendants greater protection)
California Public Employees' Retirement System v. ANZ Securities, Inc., 137 S. Ct. 2042 (U.S. 2017) (statutes of repose protect defendants by running from last culpable act)
Lantzy v. Centex Homes, 31 Cal.4th 363 (Cal. 2003) (discussion of limitations rules and accrual principles)
Roskam Baking Co., Inc. v. Lanham Machine Co., 288 F.3d 895 (6th Cir. 2002) (statutes of repose extinguish substantive rights and are not subject to waiver/forfeiture)